A new study by the National Institute on Retirement Security, using U.S. Census data for workers from 21 to 64, shows that the typical retirement balances are considerably below target for many workers. The research also uncovers a prominent gap based on marital status that extends beyond retirement accounts to broader household wealth.
Married individuals have a median retirement account balance of $20,000, which is ten times the balance of those who have never married – $2,000. The average retirement account balance of married workers surpasses $147,000, compared to approximately $59,000 for those who have never married.
The difference becomes more glaring when looking at overall household assets. Married households report an average total of approximately $606,000 in assets, nearly three times the amount of never-married workers at around $231,000.
Two incomes, shared housing and retirement costs are some factors explaining these disparities. Benefits can compound over time in tax-advantaged accounts like 401(k)s or IRAs as a result of marriage.
However, the financial patterns of never-married, divorced, widowed, and separated workers vary substantially. One notable discrepancy is how often these workers, who once had a spouse, dip into their retirement savings. Nearly 9% of these previously married individuals withdrew money from retirement accounts, double the rate of their married counterparts. They also tend to withdraw more from their accounts.
Divorce or the loss of a spouse can notably disrupt household finances, sometimes making dipping into retirement savings necessary as a way to manage sudden cost increases.
Consistent contributions to workplace retirement plans, sharing housing, and other fixed costs could offer more room for savings, implying that married workers may enjoy more advantages. Home equity can also provide financial stability, with married households reporting a median of $150,000 in home equity while never-married and divorced or widowed households report none.
However, even for married households, median retirement balances remain modest compared to typical retirement saving benchmarks.
Even though marital status can influence saving outcomes, measures can be taken to enhance financial future. Regular planning and consistent contributions can determine the outcome, regardless of marital status.