Money And Marriage: Asset Allocation Daily

Summary

• ING Economic and Financial Analysis: Look for a forceful statement from the Fed today on future rate hikes.
• Tipswatch projects a 2019 COLA increase of 3.1% to 3.2% for Social Security recipients.
• Thought For The Day: Those getting married should not defeat their objective of an independent life with a ceremony that sinks them into debt, as 74% of couples are doing.

Today's Fed Meeting

"A rapid economic expansion, above-target inflation and a slice of better news on trade could mean a more forceful statement of intent from the Federal Reserve…" (ING Economic and Financial Analysis)

Social Security COLA

"I would project that monthly inflation will average 0.20% to 0.25% over the third quarter, which would translate to a 2019 COLA increase of 3.1% to 3.2% for Social Security recipients...AARP estimates that on average, U.S. recipients of Social Security receive $1,404 a month, or $16,848 a year. A 3.1% increase would push those numbers up to $1,448 a month and $17,370 a year." (Tipswatch)

Weakening Market, Weakening Resolve

"If you have top down reasons to sell something, go ahead and sell it and if you really think that ABC's or XYZ's decline means that it will go out of business then sell it. But it is crucial to discern when emotion is winning out over reason and discipline." (Roger Nusbaum)

Thought For The Day

When my wife and I married just shy of 24 years ago, we had a budget to work with to pay for the wedding expenses. Accordingly, my wife and I agreed we wouldn't go any further down the family tree in our invitations than our parents' first cousins. It so happened that my mother's cousin asked if we could invite his children and their families as well, thinking our wedding would be a good experience for them. We awkwardly explained that we had to limit the number of people attending, to which this cousin, an exceedingly wealthy man, hinted that we'd have no need for concern. He didn't want to embarrass us by crassly saying that his gift would more than make up for the cost. I didn't want to embarrass him either, but my concern was less about the costs of adding his children than that other cousins from that wing of the family would wonder why their children were not invited. Consequently, I demurred as best I could.

This quarter-of-a-century-old episode came back to me as I read an article recently published on Business Insider that discusses just how much Americans are paying for their weddings these days. The average cost is $33,391. That strikes me as a very, very high figure. I know that I paid quite a bit less than this (after adjusting for inflation), despite our marriage taking place in pricey L.A. How is it that Americans from all walks of life and all locations are averaging such a high figure? Business Insider's next bullet point provided the answer: "More than half of couples go into debt to pay for their wedding…" The figure given is more than 74% of couples go into debt on account of their weddings.

In my day, there were more expensive and less expensive weddings, but I don't recall ever having heard of a young couple going into debt to get married - the idea strikes me as a rather obvious bad beginning that would heap financial pressure on a couple in the splendor of their newlywed lives.

And yet, the wedding is just the ceremonial start of a life together. Numerous other considerations impinge on marital finance. People are marrying later in life, and they're having children later - very often citing finances as the basis for these postponements, such as the need to get their career to a certain level. But do young couples look at the potential consequences on the other end of the lifecycle spectrum? To cite one possibility, postponement of married life may bring about the need to finance their children's college education at the very time they will need to step up plans for their own retirement - two very big-ticket items coming in close sequence.

Marrying later may also coincide with expectations of a higher level of living that comes with age; in other words, potential savings are missed by marrying past the shoestring years of young folks thrilled just to have their own place, even if it's got a leaky roof, patched walls, and fronts a noisy thoroughfare that would be anathema to a couple in their 30s.

A more fundamental question on the finances of marriage is whether it pays to marry or not. The general line has been that marriage is a pathway toward wealth, with key research in the field determining that married individuals see a 77% increase in their net worth. While I find this research persuasive, it is interesting that just a few weeks ago researchers in Germany, using U.S. data, published a study suggesting that marriage does not positively impact net worth.

Regardless of what the scholars ultimately conclude, the people have decided - based on record low marriage rates (globally, not just in the U.S.) - that the costs of marriage outweigh its benefits. And indeed, that assessment seems to be given concrete form in the $33,000 wedding ceremonies people are having.

Given that people today are seemingly so financially squeezed - between low levels of wage growth, high consumption expectations, college debt, and aspirations for long retirements, the cost of raising children and the trend toward supporting parents with long-term care issues - here's an idea that seems tailored to our times. Have a cheap wedding.

I know of someone who made a wedding in a nice outside area and brought sandwiches; a $20 bill more than adequately covered the expenses. Another young couple did the same thing with a 2-liter bottle of Coke and a cake for well under $10. Naturally, each of these weddings involved the couple and just a few friends. Having a little picnic in the park along these lines may make the occasion even more memorable at a time when most weddings have become so extravagant.

But the real point here is not to be a curmudgeon but to simply recognize that marriage is one of the key lifecycle events whose underlying intent is independence - as in independence from parents as the couple forge their own lives together. Consequently, those getting married should not defeat this purpose at the outset. Rather, they should ensure that their life plan has a sound financial basis, tying the knot in a ceremony that matches their means.

Finally, as we are at the peak of the wedding season, those fortunate to be participating in this joyous event as guests might consider doing their part to get the young couple off to a good start - with a generous gift.

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