Do Individuals Know When They Should Be Saving for a Spouse?

Households save for retirement to help maintain their standard of living once they stop working. The amount of savings needed depends on how much a household earns. Since dual-earner households generally earn more than one-earner households, they need more savings. But only about half of private sector workers have a workplace retirement plan at any given time, and people rarely save outside of such plans. As a result, only one person in many dualearner couples is actually saving. In this situation, the spouse with a plan should save more to make up for the non-saving spouse. But 401(k) plans are individual savings vehicles, and contribution decisions are often driven by plan design features like default contribution rates and employer matches, not household earnings. The question is whether workers recognize the need to save for two. The discussion is organized as follows. The first section provides background on how individuals make saving decisions and whether they are likely to factor in their spouses’ situation. The second section describes the data and methodology used in the analysis. The third section provides results. The final section concludes that individuals do not seem to consider their spouses’ behavior when making saving decisions, which means households with two earners but only one saver end up saving relatively little for retirement. This finding highlights the importance of plan features like auto-escalation and suggests a role for educating spouses about saving for two. Alternatively, policymakers could ensure that all workers have access to a workplace plan.