I’m wondering if it makes 9economic) sense for married couples to divorce, upon retirement. it seems to me that each would have higher SS benefits, and if you continue to live together, you get all the benefits of marriage, with none of the penalties. as for inheritance: put your joint assest into a living trust-and avoid probabte to boot. i s this a good course of action?
I’m sure it’s possible to dissect out the financial parts of the equation and consider them alone, but that isn’t likely to be a particularly accurate model of how things work out in the real world, because finances are not distinct from every other aspect of life the way we manage our money, motivate ourselves to do things, etc - these things are influenced by our emotional state, which in turn would be influenced by the upheaval of divorce, even if it was amicable on both sides.
But this would be divorce, with you still living together. Nothing would change-you just would not be subject to a marriage contract.
Canada is already moving to splitting of pension income. I can see tax and benefits rules applying to a family rather than individuals makes sense.
Pension splitting
“This means retired couples now have the ability to share pension income between them, giving the potential in many cases for sharply reduced income tax.”
My husband’s Danish grandparents did just that shortly after wife was diagnosed with Alzheimer (about 16 yrs ago). There was some financial incentive to do so. They sold everything and their children and grandchildren got their inheritance in advance as a one-time gift.
I don’t know about the US though.
Why would divorced couples necessarily get higher SS benefits than married couples? AFAICT, married people are entitled to receive SS benefits as individual earners if they so choose, just like single people, rather than having one spouse receive a spousal benefit:
Don’t forget, moreover, that marriage automatically entitles a couple to a whole bunch of rights and benefits that are time-consuming and costly to set up as a separate contractual arrangement: e.g., the right to make emergency medical decisions for one’s partner, which is potentially pretty important to elderly couples.
Other considerations
Health insurance. If one partner has good benefits, the other partner would probably lose them after a divorce.
Pension plans - If I die, my husband could collect part of my pension. My SO isn’t eligable.