A Boston College economist highlights research suggesting couples can significantly increase retirement savings by coordinating their 401(k) contributions to maximize employer matches. Approximately one in five couples leave matching funds unclaimed due to a lack of communication about their savings strategies.
Effective communication and coordination of retirement savings between couples can lead to substantial increases in long-term wealth, helping individuals achieve greater financial security in retirement.
Couples can significantly enhance their retirement savings by simply discussing and coordinating their contributions to workplace retirement plans, according to analysis by Boston College economist Geoffrey Sanzenbacher. Many couples overlook opportunities to maximize employer matching contributions, effectively leaving free money on the table.
Sanzenbacher's research highlights that while about 40% of couples actively coordinate their 401(k) savings to capture the full employer match, roughly one in five couples fail to do so. This lack of coordination can result in unclaimed matching funds. For instance, a hypothetical couple could increase their monthly employer contributions by $30 without increasing their own savings, potentially accumulating an additional $25,000 over 30 years with a 5% real return.
Another 40% of couples appear uncoordinated but still manage to receive the maximum employer match, likely due to independent sufficient contributions. For those missing out, Sanzenbacher emphasizes that a simple conversation about their employer's 401(k) match and individual contribution levels is the key to building more retirement wealth.
Separately, financial adviser Ryan Ponsford noted that a lack of education among financial advisers and mortgage professionals is a significant obstacle in retirement planning, particularly regarding the utility of reverse mortgages as a component of retirement income strategy.