Study Confirms Retirement Advice: Get and Stay Married!

Last Updated Feb 9, 2011 10:38 AM EST

Results from a recent study by the Center for Retirement Research at Boston College confirm conventional retirement planning advice: It makes more sense -- and helps defray costs -- to be part of a couple. The study found that two people living together can attain a higher standard of living than a single person with the same income.


The reason is shared consumption of important expenses such as housing, utilities, cars, and so on. The study found that older couples save between 24 and 40 percent more on shared expenditures than their single counterparts.

The study also found that husbands only needed to spend 76 cents to attain the same standard of living that would cost a single man one dollar. And wives only need to spend 60 cents to attain the same standard of living that would cost a single woman one dollar.

The study measured the relative effect of sharing consumption between husbands and wives and found that men spend a higher proportion of household income on their own needs compared to women. Translation: Older men spend more on their man-cave, golf clubs, and the boat than women spend on their shoes, the spa, and beauty supplies.

But this inequality decreases when men have poor health. Translation: When a man's health declines, he reduces his spending on the man-cave, golf clubs and the boat, and more of his consumption is shared with his wife. Individual consumption by women was unchanged by their health.
The results of this study can help married couples plan for the eventuality that one of them will become widowed at some point in their lives; most likely it will be the wife. How much income does she need to maintain her standard of living? It makes sense to plan that the surviving spouse will need at least two-thirds -- and possibly more -- of the couple's household income when both are alive. This has implications for how much couples draw from their 401k savings, when they begin to draw Social Security benefits, and whether they buy a joint and survivor annuity.

Don't want to get married, or that prospect seems unlikely? While the study only looked at married people, it's reasonable to assume that two or more unmarried people who live together and share resources would also benefit from shared consumption -- the "Golden Girls" solution. And that's just the financial impact; a living companion can have significant emotional benefits as well, which will increase the likelihood that you'll stay healthy longer than your "living-alone" counterparts.

Aging boomers, both married and unmarried, will need to make every dollar count in their retirement years. That means making informed and creative decisions about your consumption needs and living arrangements, and planning for the well-being of those who might survive you. Then you can truly look forward to your retirement years!

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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