Download eBook for Free
Format | File Size | Notes |
---|---|---|
PDF file | 0.9 MB | Use Adobe Acrobat Reader version 10 or higher for the best experience. |
Retirement planning is often a joint household decision-making process, and therefore the household is often the more appropriate unit of analysis. However, retirement savings in tax advantaged accounts are held in the name of one individual. While spouses have rights to these assets in the case of divorce and in most cases of death, the separation of accounts in name may cause couples to treat their accounts as separate, with each spouse making decisions separately.
In order to optimize retirement planning, couples should consider the entire household portfolio together, accounting for the characteristics of the retirement accounts, the age of the spouses, and income differences between spouses. With separate accounts, one spouse may not be aware of the contributions or assets accumulated in the other spouse's accounts. This may lead to sub-optimal decision-making, as individuals in a couple may not fully optimize across all available retirement accounts.
Little is known about how households divide retirement contributions and assets between spouses. In this project, we investigate how households locate contributions across tax deferred savings accounts that are nominally held in one spouse's name and how these decisions may impact accumulated assets. In particular we first document who within a couple nominally holds retirement assets. Using data from the Health and Retirement Study and Survey of Consumer Finances, we find that household retirement assets and contributions are more likely to be located in accounts held in the husband's name or the primary earner's name. In our regression analysis, we find that the location of contributions is largely driven by the distribution of earnings within couples.
Table of Contents
Chapter One
Introduction
Chapter Two
Previous Literature on Household Retirement Savings Decisions
Chapter Three
Optimal Asset Location
Chapter Four
Data
Chapter Five
Employer-provided Retirement Plans
Chapter Six
IRA Balances
Chapter Seven
Discussion
Appendix
Additional Tables
This study was conducted by RAND Labor and Population.
This report is part of the RAND Corporation Working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.
This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.