The Supreme Court's decision to sustain gay marriage in states where it is legal and to extend federal benefits to gay married partners by declaring the 1996 Defense of Marriage Act unconstitutional represents an enormous advance for our country. No one has a monopoly on language, and if gay people wish to use the word "marriage" to solemnize their devotion to one another and legalize their financial commitments, they should have every right in the world to do so.
As of today, they have every right to do so in 13 states, where gay marriage is legal, including the biggie -- California. Amen! And it's now time for the other 37 states to fall in line.
But there's more good news for gay couples! Unmarried gay couples in the 13 states as well as those who move to those states can, as of today, cash in on a potentially very large Social Security bonanza.
Many gay couples may not know this, but married folk get treated better -- a whole lot better -- than single folk by Social Security. Specifically, Social Security provides spousal and survivor benefits to one's spouse. And you only have to be married one year to get spousal benefits and nine months to get survivor benefits. Moreover, if your partner has a child below age 16, you can collect spousal benefits regardless of your age.
To illustrate the potential financial benefits of gay people tying the knot in one of what will surely be called The Original 13 States, I just hopped onto my company's ESPlannerPLUS financial planning program and ran the case of Jerry and Ken, who are both 55 and live in CA. They both earned middle class salaries up till now, have a modest home with a mortgage, and $500,000 in regular assets. But Ken just retired because Jerry got a big raise and is now pulling down $200,000 a year. Jerry likes his job and will stick with it until 65.
If Ken and Jerry play their Social Security cards right, they can rake in an extra $60,000 in Social Security spousal benefits - for free, just for getting married! Playing their cards right entails having Jerry file for his retirement benefit at 66 and suspend its collection, permitting Ken to take just his spousal benefit based on Jerry's earnings record. When Jerry and Ken reach 70, they both begin taking their retirement benefits, which thanks to Social Security's Delayed Retirement Credit, will start at the highest possible values.
Getting married has another financial advantage for Jerry and Ken at least for a while. The couple lowers their income taxes by $3,000 to $5,000 over the next 9 years because Jerry would otherwise get nailed filing as a single, given his high earnings. So for this couple, there is a singles penalty, not a marriage penalty during the years Jerry works.
The downside here is that once the Jerry retires, Jerry and Ken do face a marriage penalty and end up paying from $1,000 to $2,000 more in federal taxes for many a year. But the two are better off on balance over the rest of their lives.
Indeed, their sustainable discretionary spending rises from $78,595 per year to $82,010. That's a permanent increase of $3,415 each year, measured in today's dollars. Let me say this differently. Jerry and Ken can spend a few minutes in front of a Justice of the Peace or go for a supersized wedding and raise their living standard by 4.3 percent with no risk whatsoever! What a nice present care of Justice Kennedy!