For Retirement Security, Is It Better to Be Married?

March 6, 2014 ( – A report shows that over the last 50 years, the composition and work patterns of Americans have changed dramatically, with the number of unmarried individuals steadily increasing.

“Retirement Security: Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees,” released by the U.S. Government Accountability Office (GAO), highlights factors contributing to the potential economic vulnerability of single retirees. First, single retirees living alone do not benefit from sharing the cost of living expenses and caregiving. Second, unmarried individuals are more vulnerable to economic shocks, such as job loss, than their married counterparts. Third, the unmarried, especially single parents, tend to have fewer resources available to save for retirement during their working years, noting that figures from 2009 show that among women ages 35 to 54, unmarried women with children had the lowest level of pension plan participation among all family types.

“There are definitely challenges for women trying to save for retirement, not the least of which is that women statistically live longer, so they need to plan for a longer retirement,” Beth McHugh, vice president of Market Insights for Fidelity Investments in Albuquerque, New Mexico, tells PLANSPONSOR. “While women do tend to allocate their assets more appropriately, as well as doing so in a blended fashion, women may also have more breaks in service.”

McHugh suggests, “One thing plan sponsors can do to help offset such challenges is to enact plan features like automatic enrollment, which will help women to save more during their working years. Plan sponsors can also provide information about catch-up contributions, since research has shown more women take advantages of such contributions than men.”

Fidelity Investments’ fourth “Couples Retirement Study” found the number of women claiming primary responsibility for long-term retirement decisions more than doubled to 19% from 9% in 2011. However, the findings also reveal many women are still less confident when it comes to investing, and routinely defer to their partners for important financial decisions (see “Most Women Hand Financial Reins to Men”).

An Aon Hewitt analysis of participant accounts showed that while women are participating in their employers’ defined contribution (DC) plans at the same rates as men, they are saving less—an average of 6.9% of pay, compared with 7.6% for men. In addition, nearly one-third (31%) of women were found to contribute below the company match threshold, compared with one-quarter of men. As a result, women have average plan balances that are significantly lower than men, consistently across all salary ranges. Overall, the average plan balance for women is $59,300, compared with $100,000 for men (see “Women Saving Less for Retirement Than Men”).

According to the GAO report, in terms of saving for retirement, single households of both genders continue to lag behind their married counterparts. The report shows in 2010, an estimated 71% of married households ages 50 to 64 had defined contribution, individual retirement accounts and Keogh savings, while only 39% and 48% of male and female single-headed households had retirement savings, respectively.

The median levels of savings among single-headed households were found to be much lower than for married households in this age category in 2010. For married households with retirement savings, the median savings level was $122,560. In contrast, among single men with retirement savings, the median savings level was $50,000. Among single women with retirement savings, the median level of savings was $32,800.

Fewer Receiving Spousal and Survivor Benefits

In 1960, the percentage of married men and women participating in the work force was 89% and 32%, respectively, with participation for single men and women at 70% and 59%, respectively. By 2010, these rates had changed, with married men and women at 76% and 61%, respectively, and single men and women at 67% and 63%, respectively, the GAO report finds.

“For many women, this shift will be positive, reflecting their greater earnings and capacity to save for retirement,” the report says. However, the report cautions that women with low levels of lifetime earnings and no spouse or spousal benefits may be negatively affected upon retirement. “Low-wage workers who never marry or were not married long enough to qualify for Social Security spousal benefits may not be able to accrue sufficient retirement savings to offset the lack of a spousal benefit in old age.”

However, the GAO points out, even within two-earner households, the Social Security survivor benefit declines as earnings for both spouses become more similar. Survivors are therefore likely to depend on other forms of retirement income to maintain their standard of living prior to their spouse’s death.

From 1960 to 2011, the number of women ages 62 and older receiving Social Security benefits based purely on their spouse’s work record decreased from 56% to 25%. On the other hand, the number of women receiving benefits based purely on their own work records increased from 39% to 48%. From 1992 to 2010, married women’s average contributions to household retirement savings increased from 20% to 38%. And as of 2010, for married households receiving a pension, 40% elected not to receive a survivor’s benefit.

The report also finds that as a result of married women’s increasing participation in the labor force, the proportion of married households in which the wife was the sole earner has increased from 2% to 7% since 1967. At the same time, the proportion of married households in which the husband was the sole earner declined from 36% to 19%.

What this means, say the report’s authors, is that fewer retirees will receive spousal or survivor benefits from Social Security and private employer-sponsored pension plans. Eligibility for Social Security spousal benefits among women is projected to decrease, in part because more women are expected to qualify for their own benefit based on their own work record.

Are Marrieds or Singles Better Off?

As to whether married couples are more retirement ready than their single counterparts, McHugh says, “It depends. One factor for good retirement readiness is how successful couples are with communicating about financial and retirement-related topics. Also, the industry that participants work in can play a role. For example, those in the health care field are more aware of some of the issues that may be faced in retirement.”

Fidelity Investments’ “Couples Retirement Study” finds approximately four in 10 working couples (38%) disagree about the lifestyle they expect to lead in retirement. One-third (32%) of non-retired couples disagree about the role working will play in retirement, and 38% have not put a plan in place to manage rising health care costs in retirement or do not know they need to (see “Couples Disagree About Retirement, Money Matters”).

With all participants, regardless of gender, McHugh concludes, “You can never underestimate the advantages of good plan design, with features like automatic enrollment and automatic escalation.”

Jean Young, senior analyst with the Vanguard Center for Retirement Research in Valley Forge, Pennsylvania, tells PLANSPONSOR, “Plan sponsors should consider automatic enrollment with stronger default rates, of 6% or higher; automatic contribution increases until the participant is deferring 12% or more; and larger matches or other employer contributions.”

McHugh adds that plan sponsors need to assess the needs of their participants (in areas such as financial planning and income replacement) before carrying out changes to plan design. “With more data and analytics available these days, it’s easier for plan sponsors to evaluate income replacement for groups of participants. The key for plan sponsors is getting to know their participants better so they can do a better job of helping them.”

A copy of the full GAO report can be downloaded here.