The findings underscore how important it is for couples to compare their workplace benefits offerings every year and maximize their retirement savings.
The analysis, conducted by researchers from MIT, Yale University, and the US Treasury and not yet peer-reviewed, found that 24% of married couples fail to allocate funds to the spouse with the highest employer match rate. Four years on, half of those couples are still making that mistake.
“In a sense, it's not something where you get immediate feedback on are you saving effectively,” O’Shea said. “So this is a big financial decision. And so getting it wrong can be quite costly for your living standards in retirement.”The study, funded by the Retirement and Disability Research Consortium and the Yale Economics Tobin Center for Economic Policy, used regulatory filings from 6,000 retirement plans covering over 44 million employees.
“That means you don't need to cut on your spending. You can go to the restaurant as frequently as before,” said Choukmane. “But simply changing the location of your saving from the savings of the spouse with a lower incentive to the account of the spouse with a higher match rate can raise the contribution you get from your employer.”Another finding from the analysis showed a correlation between those with poorer allocations and those weaker marital commitments and vice versa.
Retirement planning has gotten more complicated since O’Brien started in the business 34 years ago, he said, and his firm now has departments dedicated to estate planning, tax reduction, investments, insurances, and cash flow management.
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