Americans today are living their lives differently than previous generations. According to a Pew Research Center analysis from 2021, more adults than ever before are living single, with a partner, or raising their kids outside of marriage. In general, people are getting married later—or not at all.

While it's healthy for individuals to live their lives how they want to live them, this type of change doesn't come without a cost. Much of American society is built around the institution of marriage. Thanks to laws, policies, and general practices that favor married couples, single people end up paying more than married people—while earning less and missing out on important benefits.

The costs may add up quicker than you think. It all boils down to one key point: Being single could be financially devastating. Let's find out why.

Single People Earn Less Income

According to CNBC, the median man with a partner earned $57,000 in 2019, while the median single man earned $35,600. The same study found that the median woman in a relationship earned $40,000 versus $32,000 for the median single woman.

Could this difference just be from differences in age? Well, a 2004 study from The American Economic Review found that when comparing identical twins, the married twin earned incomes averaging 26% greater than the single twin.

The outcome seems clear: On average, single people earn less than married people. Depending on your salary and how long you're married, this difference can cost you up to half a million dollars or more throughout your working life. If we account for compound interest, this disparity only grows.

Singles Often Have Fewer Benefits & Workplace Protections

Beyond just salaries, married people often enjoy the assistance of various workplace benefits and protections that single people miss out on. For instance, if one member of the couple is employed at a workplace that provides health insurance, they can often add their spouse to their plan. This can result in thousands of dollars of savings per year that a single person cannot access.

If you're employed by a university or college, your spouse and children may be able to access tuition discounts or “full rides" for education from that institution. Single employees of the same universities may see no such benefits.

But the difference also goes further than the financials. In some workplaces, whether formally acknowledged or not, single people could find themselves working the times that other (married) people don't want. Thanks to ingrained social norms, single people may be expected to work weekends, later shifts, vacation times, or other less convenient times than married people with families. And if the question of relocations or layoffs comes up, managers may look to single people first, as they don't have families to support. Forced relocations or unexpected layoffs can drastically impact the quality of life for a person, regardless of whether or not that person is married, but this may not change a manager's decision.

Do Single People Pay More in Taxes?

Some sources claim that singles pay higher tax rates than married couples filing jointly. The reality isn't that cut and dry. If there is a large disparity between the spouses' incomes, or if one spouse doesn't work at all, then the married filing jointly tax brackets can allow them to realize tax savings—up to a point. All but one of the married filing jointly brackets are exactly double the single brackets, giving more room for a single earner to fill up lower brackets. If both spouses make similar amounts of income, the difference between joint and single filing is negligible.

However, the highest tax bracket (37%) kicks in for couples at $693,751, just 20% higher than the single bracket's top level. If both spouses are high earners grossing at least $350,000 each, filing jointly can actually hurt their tax position relative to filing separately. Additionally, the standard deduction for couples filing jointly is exactly double the single deduction—no special bonuses there.

Table 1: 2023 Tax Bracket Comparison

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Social Security Benefits You Only Get if You're Married

While taxes themselves might not be the biggest contributor to the financial differences between singles and married couples, what the taxes go to certainly makes a difference. Social Security benefits are better for married individuals than single people for two main reasons:

1.  Spousal benefits: Although many variants of economic security systems have existed throughout the ages, the U.S. government officially initiated Social Security in 1935 to help retired and elderly Americans stay out of poverty. In 1939, they introduced amendments that allowed spouses and minor children of workers to claim benefits under certain conditions, transforming the program into a "family-based economic security program." Today, married individuals may be eligible to receive spousal benefits, which allows them to claim a portion of their spouse's Social Security earnings. This can be especially advantageous for spouses with lower lifetime earnings than their partner, as they can receive a higher benefit amount based on their spouse's work record—even after their spouse passes away.
2.  Survivor benefits: After a married spouse dies, the surviving spouse may receive survivor benefits if the deceased individual is eligible. The surviving spouse may claim benefits as early as age 60 and receive up to 100% of the deceased individual's benefit—assuming they meet the right conditions. Survivor benefits can represent a large portion of retirement income for widowed spouses, and spouses in retirement can see their own benefits immediately increase after their spouse dies.

Spousal and survivor benefits aren't available to single people, because, obviously, you need to be married to access them. Instead of having the option to leave a legacy for their loved ones like married partners do, when single people die, their Social Security benefits can end up back in the hands of the government.

How Marriage Enhances the Benefits of IRAs

Social Security isn't the only way that people access income in retirement. An increasing amount of individuals' retirement funding is coming from personal retirement plans like individual retirement accounts (IRAs). However, the rules of IRAs specifically benefit married people. Here are the main ways that IRAs leave singles in the dust:

1. Spousal IRAs bypass contribution limits for non-working spouses: For 2023, each individual with an IRA or Roth IRA is allowed to contribute up to $6,500 ($7,500 if you're 50 or older) to the account, or your taxable compensation for the year, if that number is lower than those limits. However, for married couples in which one of the spouses is unemployed, the government created the Spousal IRA. This allows the working spouse to open up an additional IRA and contribute up to the limit year after year, doubling the amount the couple can stash away for retirement in their IRAs while allowing one spouse to stay unemployed. The Spousal IRA program was specifically designed for spouses; there is no equivalent way for single people to save money for their non-working loved ones through IRAs.
2.  IRA inheritance rules benefit spouses: When a married person inherits an IRA from their deceased spouse, they have the option to treat the inherited account as their own. This allows them to delay the account's required minimum distributions (RMDs) until they turn 73, giving time for the money in the account to grow without taxes. Suppose instead you inherit an IRA as a non-spouse beneficiary. In this case, you are generally required to start taking RMDs from that IRA in the year following the original owner's death, which comes with a host of rules, regulations, and impacts to your taxable income. Additionally, a married IRA inheritor can choose to leave the assets in the inherited IRA and withdraw from it for any reason before the age of 59 ½ without incurring the 10% early withdrawal penalty. This type of benefit does not apply to a single person inheriting an IRA.

It All Adds Up to a Big Difference

According to a study by Zillow, single renters pay nearly $7,000 more per year on average than cohabitating renters. That number can soar as high as $24,000 per year in high-cost markets like Manhattan. Of course, you can avoid this "singles tax" by moving in with roommates—or getting married—but for those who choose to be single as a lifestyle choice, there may be no easy escape from the added costs and regulatory differences that being single comes with.

Instead of taking all of this at face value and "living with it," single people can take steps to set themselves up for financial success despite the odds. The first step is understanding; because you're already educating yourself on the inequities that single people face, you're well on the way to fully understanding your current situation.

After that, it’s time to take action. Planning for the future and mitigating the impacts outlined in this article is where the real work begins—and where Wealth Enhancement Group can help you most. At Wealth Enhancement Group, our Roundtable™ team of financial advisors considers your entire financial life from every angle to help you make more confident decisions. We are dedicated to applying our craft to your unique financial situation, no matter what path you choose to walk.

Living the single life isn't a financial death sentence. By scheduling a free, no-obligation meeting with a Wealth Enhancement Group financial advisor, you can take the next steps towards creating your ultimate financial plan to help you reach your goals.