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Tuesday, February 15, 2011

Retirement Advice: Get Married and Stay Married

Hat Tip: a friend

As per this article at CBS Money Watch, a study by the Center for Retirement Research shows that being part of a couple makes economic sense. The article goes on to address the benefits of economies of scale for consumption that exist for individuals who are part of a married unit. A married couple can attain the same standard of living as one person with the same income. There is some interesting analysis in the study on women's vs. men's consumption and health.

The study is a mathematical analysis and does not look at underlying factors beyond consumption patterns, resource allocation, and economies of scale as to why married couples are more successful in utilizing their resources. I don't find the take-away conclusion of the study to be particularly groundbreaking as it confirms something I have understood instinctively. I don't agree with the CBS Money Watch article conclusion that " it’s reasonable to assume that two or more unmarried people who live together and share resources would also benefit from shared consumption" as I believe that shared consumption is only one piece of the puzzle. The larger pieces of the puzzle would be the factors of commitment to the unit, stability, an underlying satisfaction within the marriage that often changes consumption patterns, and shared goals focused on the unit, not the individual.

It isn't unusual for younger singles to believe that marriage will put a damper on their finances. I don't think such is usually the case, so long as there is (reasonable) marital harmony. The advice "get married and stay married" is solid financial advice! What should be added is that increasing one's satisfaction within the marriage will improve the bottom line.

23 comments:

Anonymous said...

True, but in some respects in your "golden" years a spouse can get creamed if the other spouse gets sick and needs to be in a nursing home. In New York, for example, the spouse that is not in the nursing home can only keep about $2,000 a month for living expenses if the other spouse has to go on Medicaid to pay for a nursing home.

tesyaa said...

In the frum world, marriage is often an excuse for major expenditure - besides a large fancy wedding, full sets of furniture, unusual sized beds requiring special linens, a Bosch mixer (so the bride can bake challah with 12 cups of flour instead of only 10 in a KitchenAid) - the list of frum material "requirements" upon marriage is endless.

Anonymous said...

Good point. Not only is it a cause of major expenditures, but for those sectors where people are expected to marry and start having children at a young age -- before they have completed their education/job training and have some real world work experience, that can affect earning capacity for decades, particularly if it means not completing an education/job training and not working or cutting back to part-time hours before you have some solid job experience and have built some credibility in your field. It can also mean getting in debt and relying on scholarships.

RTJ said...

"It isn't unusual for younger singles to believe that marriage will put a damper on their finances. I don't think such is usually the case, so long as there is (reasonable) marital harmony."

In the frum world, where getting married is immediately followed by children, this advice doesn't apply. Any finincial equality that might be demonstrated between a single and a married couple certainly goes out the window when the expense of having and raising children gets factored in.

Frum couples would be wise to delay marriage (and the children that follow) to allow for educational achievement and a measure of career establishment.

Anonymous said...

I would also add that in the non-frum world, young adults are more likely to have had some time living on their own (sometimes with a roommate)(yes, I know during the recession more kids are living with their parents after completing school) and supporting themselves and the budgeting or learning the consequences of not budgeting that comes with living on ones own and supporting themselves, than in the frum world. While plenty of newlyweds of all religions or lack thereof often are horrible at finances and budgeting, lack of experience being self-sufficient may not always help a marriage get off to a good financial start.

Anonymous said...

Financial decline will continue in the frum world.

Anonymous said...

I'm sorry, I just fail to see how this can be assumed. The biggest assumption being made here is that it is a 2 income household. A single man (assuming he doesn't blow money at every turn) will always be better off than if he has to support a family.

Anonymous said...

Another consideration is the high cost of divorce. If you stay in a marriage, albeit an unhappy one, you avoid a lot of lawyer fees and the expenses associated with dividing one's assets.

EP said...

A single woman will also be better off than if she has to support a husband and family, but she is also giving up certain non-monetary satisfactions, as is a man.

Anonymous said...

One should not but financial consideration ahead of personal satisfation. Perhaps this explains why there are so many unhappy marriages in the frum world. A very sad observation from one who has been there.

Anonymous said...

I am in a Jewish divorce support group and many of my fellow group members have very serious financial problems. However, I don't know if the divorce caused the money issues or if money issues led to the divorce. I have observed a clear pattern though that the orthodox women in our group describe much more disfunctional family situations, including physical and substance sbuse, than the others.

Sally S.

EP said...

Perhaps the "shanda" - shame - of being divorced is so great for Orthodox women that they will tolerate much more than other Jewish women so as not to be blackened with the disgrace of being divorced. That is possibly why those Orthodox women who are divorced have suffered much more proportionately than non-othodox women. They have put up with much more before throwing in the towel.

Anonymous said...

Dear Sally,
I am a pscyholgist at a large clinic in the NY area. I too was shocked when I started by the large number of orthodox women and children who come to our clinic. We are not located in an area known for its large orthodox community so I think it has something to do with the "shame" of being discovered as having family problems. We actually had to open on Sunday to accomodate our clients, and we talked about setting up a shelter for abused women with a kosher kitchen. I have also heard for more than one client that what we see is only the tip of the iceberg, as only a small number of women are brave enough to ssek out help.

Eileen said...

I know this is true personally. A woman will do anything rather than shame her children and spoil their marriage prospects, as no one will consider a child of divorced parents unless their parents too are divorced. And while her husband, even penniless, can easily remarry, she cannot unless she is quite well to do and can offer a significantly better life to a divorced man. Dont get me started. It's too sad. There is no solution but to put up and keep a smiling face so at least your children can have a happier life.

Anonymous said...

Do the children really have a happier life or does the pattern just repeat itself. My personal experience is that if you as the parent don't address the issue it will just resurface. Kol HaKavod to those who find the courage to face their challenges to hopefully help their kids find a more peaceful life.
An abused wife who lived in the shadows.

EP said...

The children are happier, that I know. The mother's situation has so far not been repeated with the children. We speak of this in whispers, we hide in the shadows. We secretly prepare legal documents to protect the abused wife, with legal and halachic advice. The adult children know and do not know. We do not speak of it to them except in hints. Dai lachkima.

Anonymous said...

Many if these so-called abused wives are just looking for a bigger divorce settlement. I really doubt that abuse is such a big issue in the frum world. Sometimes these women are advised to see the counselor and she just makes the situation worse for everyone involved.

rebbetzin hockstein said...

To anonmymous who questions "so called abuse": Abuse happens! Yes, divorce is economically devastating to ALL parties. When the divorce is necessary, and healthier for the kids, there is still the very real financial fallout, i.e., less $ available for seminary/yeshiva in Israel, higher secular education, chassunahs, etc. Even so, children of divorce can make good shidduchim and happy, long lasting marriages. It takes a lot of shvitz and a lot of patience, but it can be done.

My siblings and I witnessed our parents struggle with many issues (including abuse), saw our parents divorce, experienced the financial problems after the divorce, which was actually an intensification of preexisting financial problems, money being a hot button issue in the marriage. That being said, we each struggled to work, obtain higher education or job training, spent time in seminary/yeshiva (though not all of us did the Israel thing). We all married and have stayed married in long term marriages, (more than 15 years, one sibling married 30 years!)

Life would have been different, better, easier if our parents had a clue about money management way back when. The divorce was vitally necessary, but the consequences of financial illiteracy continued into the second generation and was a significant obstacle to overcome.

My advice to my kids: Get a (financial) clue, get a life, and get your stuff (education, etc)together, so that you can be a responsible and successful adult. Your kids will thank you!

Anonymous said...

My advice is stay aware from psychologists and counselors. They often like to make trouble because the more trouble for you the more money for them. My daugher supposedly has depression because of our so-called abusive marriage, and I have to intention of wasting my money on such foolishness.

Commenter Abbi said...

Wow, anonymous 9 am, I hope your wife and your daughter get the help they need, no thanks to you. I hope they wake up and get out sooner rather than later.

EP said...

I see no joy from divorce. It is pain, shame, disgrace, grief, not to mention financial strain for the parties and their children. Nonetheless, there are times it is necessary and the Torah makes provision for those necessary times.

Ariella said...

Marriage does play a role in economics, but I believe reducing marriage to economics doesn't work. See http://www.examiner.com/jewish-bridal-in-new-york/marriage-is-not-mastered#ixzz1EAzJRzvr

JRKmommy said...

As a divorce lawyer, I believe that the major difference is in the "stay married" part.

Young singles can live cheaply. Before we got married, I lived at home and my husband had roommates. Once we got married, we had our own apartment. We also were no longer eligible for student loans for my husband, because I had an income.

Staying married, though, has real economic benefits (assuming it is not an abusive or toxic situation), especially if a couple has children. It simply costs more to run 2 households than 1, so everyone's standard of living generally declines. Very poor couples can manage, since they never had anything. Wealthy couples have enough to go around. Middle-class families with children, however, often find their world collapsing, especially if they have high levels of debt and have recently put everything they had into buying a home in a good area in the suburbs.

Those who complain that they can't afford counselling, date nights, etc. should ask themselves if they can afford NOT to do it.