I remember the message I got from High School health class loud and clear…wait until marriage to do you know what! I still recall my health teacher claiming that she was on the birth control pill following her husband’s vasectomy and still getting pregnant. Statistically impossible? Sure. Were they more likely to be struck by lightning while in the bedroom than to get pregnant? Probably. But, the “maybe better to wait” part of the story was pretty clear.

And while we can argue about the merits of the abstinence only education I received, we can’t argue about the merits of another “s” word before marriage. Saving for retirement. In this quick post, I want to point out another way to stay on the right side of wealth inequality — start saving early if you have the means. Don’t wait until big life events like marriage to start putting money away for retirement. But, as I will show, some people do exactly that.

Why it Matters: Marriage is Getting Later

For a variety of reasons, people are getting married later than ever. Gaining the financial security that comes from a job with benefits takes longer to achieve than in the past. Attitudes towards marriage are not as positive or forceful as they once were. And, the availability of medical technology like the birth control pill has also facilitated later marriage.

Whatever the cause, marriage is getting later. The figure below shows what percent of men had been married by a given age across three generations: 1) Late Baby Boomers (born 1956-1964); 2) Generation X (1969-1979); and 3) Millennials (1981-1991). I have also labeled when 50 percent of men had been married for each generation. This number increased from 27 for Late Baby Boomers to 32 for Millennials — a five year increase.

Figure 1. Share of Men Married by Age

So, marriage is happening later and later. Why does this matter for saving?

Delayed Marriage = Delayed Savings

So are delays in marriage likely to lead to delays in saving for another of life’s big events: retirement? A tempting approach would be to simply compare savings rates between married and singled individuals. If married individuals save more, then delayed marriage would be expected to lead to less saving. However, comparing married to single individuals is likely a bad approach. Certain personality types may be more likely to both get married and save. After all, marriage and saving for retirement are both long-term commitments.

Instead, in a 2019 study, my coauthor Wenliang Hou and I followed individual people before and after their marriages. Looking only at people who got married removes those pesky personality differences from the equation. Then, we used a regression approach to compare otherwise similar people in terms of education, age, earnings, etc. Did savings for retirement increase post-marriage relative to pre-marriage?

The answer was yes. The figure below shows one of our results — that people increase their participation in 401(k)s post-marriage.

Figure 2. 401(k) Participation Rates, Before and After Marriage

Our results also showed that people who were participating in 401(k)s increased their savings rates post-marriage. For men, the increase was from 5.2 to 5.5 percent of their earnings on average. For women, it was from 4.8 to 5.6 percent. So, some people seemed to be holding off participating until marriage. And, those who were participating seemed to be holding of on increasing their contributions.

Do these Delays Matter?

So, do our results imply big reductions in retirement savings due to delayed marriage? Let me give my contractually obligated economist answer: “it depends.” If you look at the “average” person, the effect is pretty small. For five years of delay — the distance between Late Boomers and Millennials halfway point in Figure 1 — the typical male would lose about $8,500 in retirement savings from their lower participation and contribution rates. The typical women, about $7,500. These decreases represent fairly small reductions in total wealth — about 3 percent at retirement. So not nothing, but not huge either.

However, the “average” person in this analysis is sort of strange. For example, a hypothetical male would go from having a 38 percent chance of saving pre-marriage to a 43 percent chance post-marriage. Of course, no real person acts this way, they either save or they don’t. It turns out that for one of the 5 percent who actually waited until marriage to have s…avings, the effect could be quite large. The reduction would be nearly $50,000 for men and about $35,000 for women. For those 5 percent who save nothing prior to marriage, that’s about 20 percent of potential retirement wealth.

Look, you can have your own opinion about the value of waiting until marriage for some things. But, when it comes to saving, it’s important to start early. As people get married later and later, the importance of doing it (saving) before marriage is only getting more important.