Do spouses coordinate their investment decisions in order to share risks?

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 spouses earnings or through having an underlying defined benefit plan.