Is Marriage a Good Financial Decision in Residency/Fellowship?

[sarah523]

I've seen a few scattered posts about this topic but no definitive guide based on income brackets, so I thought I would put this out there. I am a 4th year medical student in a long term relationship with a significant other with a good, non medical field job. We are planning on moving together for residency and having children in the next 5 years or so and getting married, but not if it means losing a significant amount of money. In that case, we would prefer to be domestic partners until it was financially reasonable to get married. We are trying to run the numbers but it is tricky- any thoughts?

Me: planning on subspecializing in pediatrics (likely oncology), hoping to remain at an academic medical center and, as of now, planning to  PSLF. We'll likely end up in a large urban area like Boston, SF, or NYC.

Finances: $215,000+ federal loans. Likely won't qualify for PAYE as have undergrad loans from 2006-2007 (these did get automatically consolidated in 2012, though, so I may as well try. On the phone, myfedloan surprisingly said I would qualify for PAYE as all loans now appear in the system to originate from 2012).

Him: 150-200k base, could be up to 300k with stocks in 2016. I believe his base salary should be relatively stable at least throughout residency. About 15k student loans that he plans to pay off.  Neither of us has family money.

If I'm eligible for PAYE, then I think it could be ok loan-wise to get married and file separately. However, if I want to use RePAYE in residency (and switch to IBR after fellowship) it seems we would lose a good amount of money by getting married. I'm not sure, however, what the financial implications would be in terms of other types of tax credits that exist with marriage and filing statuses. It seems that with such disparate incomes getting married would not be a mutually financially beneficial decision- is this correct? If the savings is in the order of $50-100k then that is a significant amount that could be used for savings, investments, etc!

 

I would appreciate any suggestions about how to work through the numbers for the different scenarios as well as general suggestions of how to move forward. Thanks!

[AlexxT]

I think it's great that you're thinking about this in advance.  I think the only way to figure it out is to do the hard work and run the numbers.  I suggest that you get TurboTax and run the numbers as individuals, as married filing separately, and as married filing jointly.  See what you come up with for the difference in taxes.   If someone already does your taxes for you, then have them do it for you.  Even if they charge you for doing it it's probably worth the money, assuming that they know what they're doing.

Then run the numbers for the loan repayment for all 3 options, and for refinanced loans (although interest rates on refinancing will likely be higher in 5 years.)

It would be wise to maintain your eligibility for PSLF, but don't count on it. It may go away, or you may decide that you prefer private practice.

[Joseph]

sarah523 wrote:

We are trying to run the numbers but it is tricky- any thoughts?

Click to expand...

Hmmm, imagine that: Trying to game the government and the legality of marriage in order to save money is confusing.   :roll:

You get to live one time.  Make a life commitment if it is worth it. Having one spouse is a good financial decision but an even better personal decision.

[The White Coat Investor]

Married folks who stay married tend to accumulate more wealth and report more happiness. While there are few absolutes in life, I would neither buy a house, pay off a partner's loans, or have kids without being married, even if it cost me more money. What are you going to do, run the numbers every year and divorce in the years it makes sense to not be married in order to pay less in taxes?

[The White Coat Investor]

Also for this particular decision, consider getting advice from a student loan expert if you're having trouble running the numbers on your own.

[PhysicianOnFIRE]

He has an excellent income.  You will have an excellent income when you finish residency.  Combined, your income will be easily top 5%, likely top 2%.

It's great to plan ahead and know the repercussions of your decisions, but the financial impact of marriage should play at most a tiny role in your decision to get married and when.  I've seen many low-income mothers / couples avoid marriage to qualify for government assistance.  As a physician marrying another high earner, you've got no need to play that kind of game.

If waiting a few months will make the difference of $100k, and you're indifferent as to the timing of the wedding, then I could understand.  I doubt it's that straightforward, though.

 

Best,

-PoF

[scbunker]

My wife and I were married right out of undergrad. She's now PGY2 in child neuro, with three years left to go. We qualify for PSLF and file separate taxes. PSLF then only considers her income (~53K), but our household size is still 2 (screwed up system, I know). Before getting PSLF approval our loan payments were around $650, I think, and now they're $230. Yours would be much higher if you file joint taxes as your boyfriend's income is 3+ times mine.

However, I recommend do not let money math decide when you're to be married. Or have children. For life's most important things, you do what you need to do and everything else will adjust to fit in. Some in our families would have preferred we waited to be married until after med school. Four years!! Nonsense. Sure, sometimes it was (and is) tough (there were no jobs in my profession (as defined by my undergrad degree) available where she attended med school, so I took a job at $33K/year). Had we not married, her parents would have continued to support her and pay cash for her med school. Yet, even in hindsight, I still think waiting would have been nonsense. The bottom line of your balance sheet cannot be the ultimate decider of all life's decisions.