Marrying later in life can affect your tax status, retirement benefits and eligibility for financial aid for your children’s education, and has implications for your estate planning. While some of the advice that is given to young newlyweds pertains at any age, there’s a different set of considerations when one or both partners are middle-aged or older and have the life experiences—previous marriages or children, for example—and financial complexities that come with having lived decades as an adult.
If that all sounds overwhelming, keep in mind that it’s possible to manage all these money concerns and have a happy marriage, too. The key? Communication. “We know that finances are the number two reason for divorce,” says Kitty Bressington, CFP and founding principal of Linden Financial Consultants, an independent financial planning and investment consulting firm in Rochester, NY. “But you can head that off by having conversations before getting married later in life.”
Here are the things you need to consider and discuss before you wed.
Prenup, Prenup, Prenup
Financial experts want to rebrand the often-maligned prenuptial agreement. “Having a prenup doesn’t mean you love each other any less,” says Bressington. “It’s just a legal document that explains things, that gives you a better understanding of how assets are going to flow through the marriage.”
Many financial planners recommend a prenup to protect yourself, as well as your kids from other relationships. If you’ve been single for a while, or you never married, you may not be thinking of a particular asset as vital to your financial picture—because it’s always just been yours. That all changes when you’re married.
Communicate, Early and Often
A side benefit of getting a prenuptial agreement is that by necessity, you and your partner will fully hash out all the details of your current financial picture, for better or worse.
Ideally, you’ll also talk about your hopes for your money, both while you’re living and after your deaths. If you’re planning on leaving your children from a previous relationship with enough money to pay for your grandkids’ college educations, for example, and your future spouse was banking on that money to secure their own future—well, that’s a conversation that’s best had before the wedding vows. Similarly, conversations around debt, child support, spousal support and earnings are all best had before you’re hitched.
Consult With Experts
Feeling awkward about talking about money? “Bringing a financial consultant into the picture can help smooth over the conversation,” says Bressington. “A neutral person, who will prod and ask good questions, will really help secure the relationship for the future so there’s no surprises.”
You can also work with a family law attorney, an estate planning attorney and a tax preparer before your marriage. “If you’ve been filing single, you might want to have the tax preparer run a dummy return,” says Bressington, who adds that she sees many married clients filing separately, because of either complications from a previous marriage or student loan issues. (Gen Xers are indeed still paying off their student loans, in the prime of life.) An estate planning attorney and family law attorney can help you figure out the ramifications to your estate plans (see below), create trusts and wills, and help you with prenuptial agreements.
Keep in mind that you need to hire a team that understands the state law where you’re getting married and/or where you plan to live. State laws vary widely and can have huge implications for your estate after your passing or the viability of prenuptial agreements in the event of divorce.
Navigating Estate Planning and Inheritance
An estate planning attorney and financial advisor should also dig into the nitty-gritty of how your assets will be shared among family members when you’re gone—whether that’s your new spouse, your children or stepchildren, or even a past spouse.
Your planners should help you outline a scenario—say, for example, you want to leave everything to your own adult children—and work backward from your wishes to the correct legal and financial structure to make them happen. Have you considered spousal support laws? Some states guarantee a surviving spouse a fixed percentage of the estate, regardless of other estate planning. “Attorneys don’t talk in everyday language,” says Bressington. “Put a picture on a piece of paper and ask, ‘Is this how this will happen?’”
Housing Concerns
Homeownership in a later-in-life marriage can cause complications. Some couples, Bressington says, sell their individual homes in order to buy together. Should the marriage end, however, “understanding who put what into the new house can be really important when trying to unwind that house,” she says.
Imagine if your spouse dies and leaves you half of their house—but the remaining half goes through their estate and to their adult children. What are your rights? Are you on the deed? Do you have joint ownership with rights of survivorship? Where will you live while it gets worked out? “You really need to understand what each of those pieces are,” says Bressington.
Retirement Planning
With time less on your side to both earn and allow for market downturns, retirement planning is of the utmost importance at midlife. “If we don’t have a good handle on retirement, everything else crumbles,” Bressington points out.
Vital sources of income in retirement will be affected by marriage: Social Security and pensions. Pensions vary by state and by organization, so it’s important to understand how those benefits will work. In some cases, pensions only go to a spouse. “For the person marrying into the pension, that could absolutely change their future outlook,” says Bressington.
When it comes to Social Security benefits, the details can also be complicated. In general, the rules are that you can collect your own benefits or half of your spouse’s (so long as you’ve been married 10 years), whichever amount is greater. Consider, however, if you’re in your late 50s and you have a deceased spouse, whose benefit you’re still collecting. If you marry before age 60, you’ll automatically take your own or your new spouse’s benefit (once you’re married 10 years). Will that amount be the same? Less? More? All of those complications can be worked out, but as Bressington points out, the important thing is to understand the financial implications ahead of time.
Budgets and Goals
After weightier conversations, building a budget together may sound like a breeze, but it’s an essential step. What are your individual values around money? What goals do you have for your future? “Are you both stay-at-home, gardening and going to the library types? Or does one of you want to travel the world—and how are you going to make that work?” Bressington says. If one spouse is younger, this is also a good time to talk about how your ages affect your financial picture. What will it be like if one partner is just hitting their peak at work, while the other partner is ready to move into retirement, for example?
To handle daily expenses, Bressington recommends creating a joint household operating account, to which each person contributes. The contributions could be equal or based on each of your earnings or some other methodology that works for you as a couple. One client, she says, structures their finances so one pays for necessities, such as housing and cars, and another covers discretionary spending, from travel to nights out. Decide what works for you.
One big impact to your budget may be financing higher education. If, as a couple, for example, your income bracket changes, you may not qualify for the financial aid packages you would have previously. Let’s say you marry a spouse who makes a very high salary, and you have children from a previous relationship who haven’t yet gone to college. You no longer qualify for financial aid because of your spouse’s income—but perhaps you’re not in a situation where your new spouse can—or will—pay for school. How will you and your new spouse (or former partner) work it out? Again, talking with a financial planner and making these decisions together, as a couple, before the marriage will go a long way to smoothing your financial life together.
The Wisdom of Experience
If it sounds a bit complicated, well, what isn’t? “The thing about marriage later in life is that we’ve had a whole life,” says Bressington. But by talking with your partner, you can create a financially sound base to begin your future together. After all, as Bressington points out, “There’s virtually nothing that is insurmountable—as long as you know about it.”
Julie Anne Russell is a Brooklyn-based freelance journalist. She writes on personal finance, small business, travel and more.