Study: Marrying Later Could Delay Saving for Retirement

Delaying marriage until later in life could also delay the time at which a worker enrolls in a 401K savings account, and the amount of money that is contributed to it. This is according to a study conducted by Geoffrey T. Sanzenbacher and Wenliang Hou, members of the Center for Retirement Research at Boston College.

For most future retirees, their only source of retirement savings outside of Social Security benefit payments will be their participation in a 401K plan, presuming that participation in such a plan is started early enough and with a sufficient fraction of a worker’s salary. Any trend that results in a delay of marriage until late in life may also delay both earlier participation and sufficient enough salary transfer into a 401K account, because people tend to have higher 401K participation and contribution rates after they marry.

Marriage age and generation

With each successive generation, the overall trend of age at first marriage is increasing. Delaying marriage until later in life is far more common among millennials than with Generation X’ers, and Gen X’ers were more commonly marrying later than late baby boomers. Since marriage is seen as a common cultural “line between youth and adulthood,” as the study says, a logical question emerges concerning how the start of marriage later in life can affect the beginning of retirement savings.

“While the overall trend in age at first marriage is clear, its implications for a decision about whether and how much to save for retirement are less clear,” the study says. While previous literature indicates that marriage tends to serve as a starting point for saving for a house among those who make plans for having kids, the ultimate decision to save for retirement may be different.

“Since retirement is so far off in the future, marriage does not necessarily serve as a trigger event for focusing on retirement saving,” the study continues. “And while recent research suggests that married couples have longer planning horizons than singles – making them more likely to think about retirement saving – the evidence on the subject is limited.”

Effects on retirement

While there are correllary trends established between marriage and the beginning of retirement savings, the researchers come to a conclusion that the overall effect of delayed marriages on future generations’ retirement wealth is likely to be minimal, partially because of the increasing prevalence of automated solutions designed to promote savings activity.

“Features like automatic enrollment and automatic escalation are becoming more common and can start people on the right track before they hit milestones like marriage that may cause them to start thinking about retirement,” the study’s conclusion reads. “Financial education could also play a role, with employers and 401K providers perhaps stressing the importance of an early start in accumulating enough resources for retirement. After all, every little bit helps in terms of retirement preparedness.”

Read the full brief at the Boston College Center for Retirement Research.

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