Married or single? Who has the advantage in retirement planning?

September 22, 2011

“I told you so.”

Those are the four words no spouse wants to hear from their partner, especially when it comes to investing and retirement planning.

Just ask Dr. David Rothberg. Rothberg, 59, and his wife heavily invested in tech giant Cisco way back in the mid-1990s. She wanted to shift money into bonds instead. But that’s not Rothberg’s style: “I’m an aggressive investor, and the market was going up 30 percentage points per year, so why would I invest in something that would get us six percent?”

As the technology boom went bust, Cisco’s revenue fell for the first time in the company’s history. By the summer of 2001, sales were down one-third compared to six months prior. Cisco stock had lost 68 percent of its value in 10 short weeks.

“I should have listened to my wife, but I didn’t,” says Rothberg, an ophthalmologist based in Clearwater, Florida.

Are these verbal jousts between couples hindering financial decisions? According to new research from Charles Schwab Corp, they do. The survey revealed the majority of Americans — both single and coupled — believe planning for your golden years is likely smooth sailing for the non-married cohort.

Among the survey’s findings:

  • 53 percent of married Americans and more than two-thirds (69 percent) of singles believe financial decisions are easier to make when single.
  • 58 percent of those married say the decision when to retire would be easier if they were single, while 62 percent say the decision where to retire would also be easier without a spouse.
  • More than one-quarter of married clients surveyed (27 percent) say they bounce financial decisions off of someone other than their spouse.

And advisers tend to agree — noting risk tolerance, age differences and overall health and lifestyle considerations only serve to complicate the planning process. “I do a lot of marital counseling, not by choice and not on purpose,” says Wayne Copelin, president and founder of Copelin Financial Advisors in Sugar Land, Texas. “Married people have similar concerns, but for a single person —  it’s not only easier, it feels easier. If you have a husband and wife, you’re putting the mortality of two people together.”

Over the past 50 years, there has been a sharp decline in marriage across the U.S. In 1960, two-thirds (68 percent) of all twenty-somethings were married, but in 2008, just over a quarter (26 percent) walked down the aisle, according to data from the Pew Research Center. The most recent data from the Census Bureau shows for the first time in history, married couples account for less than half of all households (48 percent).

And while the perception is singles have it easy, those going solo are falling short when it comes to getting their financial houses in order. According to the Schwab survey, 85 percent of married Americans are already saving for retirement, compared with 67 percent of singles across all age groups. More than one-third (38 percent) of married Americans express confidence in their retirement readiness compared to just 32 percent of those who are single.

“There are occasionally people who save more because they’re single, and they don’t have the responsibility of a spouse or children. They’re able to have that discipline, but typically, we’ve found single people don’t save as much because they’re out trying to do more on their own,” says Gordon Tudor, principal at Wealth Analytics, an advisory firm in San Diego, California.

And the numbers are even more startling for single women. About 40 percent of female baby boomers are single now, which represents a rise of 10 percent from 1989, according to AARP.  Among unmarried women over 60, nearly one in six lived in poverty in 2008, according to the Center for American Progress.

As a single mother, Jerri Will, 59, says most of her income and time went to raising her two daughters. “At 50, when they were out of the house and married, I started saving for my retirement fast and furiously,” says Will, an entrepreneur and Schwab client.

Will has been investing aggressively for the past nine years, dividing her assets between dividend-paying stocks and rental properties to ensure she has a steady monthly income — an important consideration for singletons. One single person in retirement spends 70 percent to 75 percent of what a couple spends, according to a report from the American Academy of Actuaries. On a per-person basis, the cost of living for singles is 40 percent to 50 percent higher than that for married people.

“It’s statistics like these that highlight how important it is for women, especially single women, to take control of their retirement future,” says Colleen O’Brien, vice president and branch manager at the San Ramon, California Schwab location.

“If you polled most women, they’re all writing the checks to pay for expenses in the home. They’re capable of making sure the bills are paid. But when it comes to the investment piece, they hand it over to their husbands because it’s intimidating,” she says. “The longer they go on like this, the less say they have in the conversation.”

While it may be easier to plan for retirement with only one person to consider — a second opinion can be just what your portfolio needs. After 2002, Rothberg began investing more in fixed-income, and his wife took the initiative to educate herself by joining an investing group. ” I did take her advice … eventually,” he says.

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