Wondering what is the best strategy to put aside money for that time in your life when you’ll be old, ailing and unable to earn a steady source of income for you and your family? The average expert will recommend a whole range of investment plans for you to consider, ways and means to reduce expenses, tips to raise your income while saving on tax, getting refunds, and suggestions on getting the best rate of interest possible. He is probably giving you extremely sound advice, no doubt about that. However, only the most experienced financial wizard will be able to tell you the secret of saving for your retirement – Marriage. Don’t believe me? I kid you not, sir. I have studies to back my claim, no matter how absurd it might sound to you.
A study published recently by the National Bureau of Economic Research evaluated how “retirement-ready” most Americans were. The research was conducted by Michael Hurd and Susann Rohwedder from the non-profit research organization RAND Corporation. They collected data from a study group comprising of 66-to-69 year olds. 51% of single respondents in the group showed every inclination to outlive their retirement savings. In sharp contrast, the percentage of couples in the group who showed a risk of getting into financial troubles post their days in the office was as less as 23%.
The high point of the study, however, was the surprising conclusion that most Americans were in a good place as far as preparing for their retirement was concerned. 71% of early baby boomers who were nearing retirement had enough funds to channel into their old-age savings. This data comes in direct conflict with the results of the study conducted by the more popular National Retirement Risk Index. According to their figures, more than half of working-age households had failed to save sufficiently for their retirement.So, why the huge difference in numbers?
According to Boston University’s Laurence Kotlikoff, it may have something to do with how both parties calculate the money you need to get through your post-employment years. The most popular formula – that the National Retirement Risk Index also subscribes to – is to work on the assumption that your spending remains constant when you stop working. Hurd and Rohwedder, disagree with this assumption and, instead, work on the principle that spending usually drops as we get along in age. What this means is that the average American is richer as gets older not by virtue of the fact that he has more money; but simply because his spending is reduced.
Hurd and Rohwedder’s research showed that several factors affected how people prepared for their retirement, one of them being level and quality of education. However, the most surprising factor perhaps was the role of marital status in causing people to develop a more responsible outlook towards money. To illustrate when studying a group of women who did not hold a high school degree, it was found that only 27% of single women were well-prepared for their retirement years in contrast to 68% of married women. Although the study did not volunteer any explanation for this trend, the numbers are irrefutable. I guess that is yet another feather in the cap of people who’re constantly championing the virtues of marriage!