UpFront | Published in October 2016

Couples Need Help Planning Retirement

Retirement plan sponsors can help by including spouses and partners in educational events.

By Rebecca Moore | October 2016
Art by Eric Hanson

A survey of over 1,800 Americans in a relationship—defined as those who are married or living with a partner—found that savings inaction, failure to share financial specifics with their significant other and reliance on overly conservative investments may be jeopardizing their chances for a happily-ever-after retirement.

One in three Americans in a relationship (33%) report that neither they nor their partner are saving for retirement. Among the 36% of Americans in a relationship who report that their partner is saving, roughly one in five (23%) say they do not know how much he or she contributes to a long-term retirement account, or that they even have a general sense of such an account’s total value (21%). In addition, 21% of Americans in a relationship who are personally saving for retirement say their partner is unaware of how much they contribute to their long-term retirement savings.

Dayana Yochim, investing specialist for NerdWallet in San Francisco, who wrote the report “Money Secrets and Sluggish Savings Put Couples’ Retirement Dreams at Risk,” says, “There are financial advantages to being part of a couple, and, by not talking about retirement savings, they could be leaving money on the table and shortchanging their future together.

“Often we see one person more engaged in the logistics of saving for retirement,” Yochim says. “That’s fine but what if that person dies or becomes incapacitated and is unable to do those duties anymore? If their partner is in the dark, he or she won’t know what to do.”

Thirty-nine percent of Americans in a relationship who are saving for retirement use a workplace retirement savings plan, such as a 401(k) or 403(b). However, the second most common account Americans in a relationship use for their long-term investments is a bank savings account (31%)—despite the fact that these typically pay minimal interest.

Yochim says education is key for nudging couples to start crunching the numbers. General education should provide basic rules for finances, such as to pay off high-interest debt, create an emergency fund and balance college savings and retirement.

Yochim suggests plan sponsors or advisers host a financial health day and invite employees’ partners to discuss retirement goals and their savings plan.
“Including other members of the household in these decisions will help get conversations started,” she concludes.

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