Therefore, spousal IRAs protect the non-working spouse in the event of a divorce. In 2021, the maximum is $6,000 or $7,000 for those over age 50.Ī spousal IRA isn’t co-owned by both parties. The working partner can contribute up to the annual maximum to their spouse’s IRA, just like a normal one. But if one spouse isn’t working at all, there is such a thing as a spousal IRA.Ī spousal IRA is just a regular IRA (either traditional or Roth), that you open in the name of a non-working spouse. If possible, both couples should take advantage of any company matching through their prospective employers. And as for income, one partner may be working at a tech startup with a six-figure salary, while the other teaches elementary school and makes $42,000 per year. For instance one partner might have higher medical bills and the other may be paying off student loans. Just because you’re married doesn’t mean you both have the same costs (now or in the future). To start, look at the income and expenses of both partners. So let’s dial it back and look at some retirement saving strategies for couples. We know setting a $2.1 million goal for your retirement savings can feel like a lot. So even though your other expenses may slow in the “no-go” phase, you and your spouse should prepare to have enough set aside that you can comfortably pay for healthcare. That number will likely be bigger when millennials are senior citizens. According to a recent Fidelity estimate, today’s average couple retiring at age 65 in 2021 needs about $300,000 to cover healthcare costs for the rest of their life. However, a big concern in the last phase is healthcare. Ideally in this phase, your home and autos are paid off and your expenses are just the basics. This is the “slow-go” phase.Īnd finally, in the last phase-sometimes called the “no-go” phase-a couple’s expenses reduce dramatically. They start traveling less as they age, perhaps settling down in their fancy new recliners, and requesting that their families start visiting them around the holidays-not the other way around. In the second phase, the peak of the bell curve, a couple’s expenses usually level off. Maybe you and your spouse will buy a new car for long roadtrips, take that extended European vacation, pop in on your children to spoil the grandkids, or buy a lake house or retirement home in your dream location.īut this won’t last forever. “Theoretically in that first phase of retirement-that ‘go-go’ phase-expenses are going up,” says Gardner. In the first phase of retirement, a couple’s spending increases from their baseline as they celebrate their newfound freedom. This is how Mac Gardner, Florida-based certified financial planner and founder of financial literacy company FinLit Tech, puts investing for retirement into context. Think about all that’s happened in your first 30 years of life-now imagine similar lifestyle and economic fluctuations when you and your partner are seniors.įinancial planners therefore will often frame expenses during retirement years as a bell curve with three unique phases: the 'go-go' phase, the 'slow-go' phase, and the 'no-go' phase. We often talk about our retirement years as though our lifestyle will stay fixed, but retirement itself comprises 30 years, sometimes even more. Your retirement costs aren’t always going to be the same from ages 60 to 90. Expect to plan, then plan again, and plan again, knowing that every conversation will refine your decisions and continually prepare you for life after your working years.Īhead, let’s look at the different factors you should think about when planning how much you and your beloved need in order to have truly golden golden years. Over time, you and your spouse should expect to talk about money a lot. Life events happen along the way that could either reduce your expected cost of living or shoot it way up-but at least it’s a starting point. Needless to say, it’s not a perfect science. Preparing for your future retirement expenses requires looking at the big picture of what you and your partner's lifestyle is like now and then projecting those costs more than 30 years into the future. We know that investing as a couple can be a challenge thanks to factors like differing risk tolerances, the amount of debt each spouse brought into the marriage, and potentially working with vastly different salaries, or even expenses.Īnd then there’s deciding on your magic numbers-aka asking yourself how much money the two of you really need to live on when you’re older. If you’re a newlywed who started saving for retirement before you said “I do,” there’s a lot to talk about with your spouse once the wedding festivities are over.
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