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Do Spouses Coordinate Their Investment Decisions In Order To Share Risks?

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by Cori E. Uccello

WP#2000-9  

Abstract

This paper uses the 1995 and 1998 Survey of Consumer Finances to examine 401(k) asset allocation behavior by individual and household characteristics, including spousal asset allocation behavior. The results provide evidence that, among married households in which each spouse has a 401(k) plan, spouses tend to invest their 401(k)s similarly rather than diversifying their holdings across spouses to share risks. The findings also point to the lack of diversification between 401(k) asset allocations and other household holdings. However, the results suggest that households can diversify in other ways, such as through a spouse’s earnings or through having an underlying defined benefit plan.

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Cori E. Uccello is a Senior Research Associate with the Urban Institute. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. An earlier version of this paper was presented at the Second Annual Joint Conference for the Retirement Research Consortium, “The Outlook for Retirement Income,” May 17–18, 2000, in Washington, D.C. The opinions and conclusions are solely those of the author and should not be construed as representing the opinions or policy of SSA or any agency of the Federal Government or of the Center for Retirement Research at Boston College or the Urban Institute, its trustees, or its funders. The author would like to thank Robbie Howell for excellent research assistance and Rich Johnson and Frank Sammartino for helpful comments.
Tags: Private Pensions, Savings and Consumption, Working Papers,
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