Liliana Hall at Money wrote about married couples missing out on free money for retirement. The research she cited found that roughly 6 in 10 Americans have a retirement plan, but couples often fail to coordinate contributions between two plans, and when one spouse has a more generous employer match, they miss it.
I see this gap constantly with the dual-income couples I work with: they think about retirement savings individually, not as a household system. Each spouse picks a contribution rate when they start a job, often years apart, and neither one looks at the two plans side by side. One may be contributing well past the match at a company that matches 3%, while the other is under-contributing at a company that matches 6%. Same household, same money, wrong account.
The free money framing is accurate, and that is exactly what makes the miss so striking. Most couples are not ignoring their 401(k)s. They are contributing regularly. But they are not comparing the two match formulas and directing dollars to the plan that pays the most for them first.
The fix is one evening with both plan documents. Find each employer's match formula. Fund the higher match to its full threshold first. Then fund the second match to its threshold. Only after both are captured does it matter which account gets the extra.
A match is part of your pay. Leaving part of it uncollected is a raise you turned down.
Read the full article at Money →
