18 Jun One Retirement Savings Move Married Couples May Be Missing | Nova Wealth Management
One Retirement Savings Move Many Married Couples May Be Missing
When married couples think about retirement planning, they often focus on saving more, investing wisely, and reducing taxes. However, a recent study suggests that many couples may be overlooking a surprisingly simple strategy that could help increase their retirement savings without contributing an extra dollar.
A recent Investopedia article highlighted research from the Center for Retirement Research at Boston College showing that many married couples fail to coordinate their workplace retirement plan contributions, potentially leaving valuable employer matching dollars on the table.
While the concept sounds simple, the long-term impact can be significant.
Why Employer Matching Contributions Matter
Employer matching contributions are often described as one of the most valuable benefits available through a workplace retirement plan.
When an employer matches a portion of an employee’s 401(k) contributions, that match effectively becomes an immediate return on the employee’s contribution.
Yet according to the research cited in the article, approximately one in five married couples fail to maximize available employer matching opportunities through proper coordination.
The study found these households miss out on an average of $757 annually in potential retirement savings.
Not All 401(k) Matches Are Created Equal
One reason coordination matters is that employer matching formulas can vary significantly between employers.
For example, one spouse’s employer might offer:
- Dollar-for-dollar matching up to 3% of salary
While another spouse’s employer might offer:
- 50 cents on the dollar up to 6% of salary
At first glance, both plans appear attractive. However, maximizing the higher-value match first may generate more retirement savings for the household overall.
In some situations, couples may unintentionally prioritize contributions in a way that reduces total matching contributions available to the family.
Small Decisions Can Have a Big Long-Term Impact
The research found that failing to coordinate retirement contributions resulted in a median reduction of approximately $383 annually in total retirement savings.
For higher-income households, the missed opportunity can be substantially larger.
While a few hundred dollars per year may not seem significant, retirement planning is often about the cumulative impact of small decisions repeated over decades.
Additional employer contributions invested over many years may compound into a meaningful difference in retirement assets.
Retirement Planning Is a Household Decision
Many couples naturally view retirement accounts as individual assets because each account is held in one spouse’s name.
However, successful retirement planning often requires looking at the household as a whole.
Questions couples may consider include:
- Which spouse has the stronger employer match?
- Are both spouses maximizing available matching contributions?
- How should retirement savings be allocated between accounts?
- What retirement income goals are being pursued?
- How do taxes affect contribution decisions?
These conversations often become part of broader Financial Planning and Retirement Income Planning discussions.
Looking Beyond the Match
While maximizing employer matches is often an important first step, retirement planning involves more than simply capturing available matching dollars.
Couples may also need to consider:
- Retirement Tax Planning
- Traditional versus Roth contribution decisions
- 401(k) contribution strategies
- Traditional IRA opportunities
- Roth IRA contributions
- Asset allocation decisions
- Retirement income projections
The goal is not simply accumulating assets, but creating a coordinated strategy that supports future retirement goals.
Common Misconceptions Can Get in the Way
The researchers noted that some couples may hesitate to coordinate retirement contributions because they view retirement accounts as separate assets.
Others may simply never have considered comparing employer matching formulas between spouses.
In reality, maximizing available employer benefits is often one of the most straightforward ways to improve long-term retirement outcomes.
The Bottom Line
Many married couples work hard to save for retirement but may unknowingly miss opportunities to maximize employer matching contributions.
By evaluating retirement accounts from a household perspective and coordinating contribution strategies, couples may be able to increase retirement savings without increasing overall contributions.
If you would like to discuss retirement planning, employer-sponsored retirement plans, or strategies for maximizing retirement savings opportunities, contact Nova Wealth Management or schedule a meeting with our team.
Source inspiration and referenced article:
Investopedia via AdvisorStream — One Retirement Savings Move Married Couples May Be Overlooking
Disclosure: This content is for educational purposes only and should not be construed as personalized financial, tax, legal, or investment advice. Retirement planning strategies should be tailored to each household’s unique goals and circumstances.
No Comments