Married couples face some extra considerations when planning for their retirement years. Not only do you need to prepare for an income that supports both of you for the rest of your lives; you also must confront the reality that one of you will probably outlive the other. And while the widow or widower can still enjoy distributions from their deceased spouse’s retirement account, some changes can occur with regard to Social Security benefits.
It might not surprise you to learn that a significant gap exists between the retirement savings of men versus women. In 2014, a study by the Employee Research Benefit Institute discovered that the average IRA balance for men was $139,467, while women had saved an average of $81,700. That’s quite a large difference!
The difference might be explained by the fact that women are more likely to take time away from their careers due to family obligations, like childbirth or caring for older relatives. And of course, that means they take time away from stashing money in their own retirement accounts.
That obviously puts women at a disadvantage, but it sets the couple back too. After all, we always say that a good rule of retirement savings is to take advantage of the opportunity to save as much as you can. Why neglect years of saving, if you don’t absolutely have to?
A spousal IRA was conceived for that exact purpose. With this type of retirement account, a working spouse can save money in an additional retirement account, while enjoying the same tax benefits. Now, no time is wasted with regard to saving for retirement.
We should note that nowadays, some women are out-earning their male partners. But when the genders of the partners are reversed in this way, women can also open a spousal IRA for their husband if he can’t access one.
A spousal IRA also offers a bit of insurance in the event of divorce. Sometimes, one spouse is left with nothing in the way of retirement savings. In other cases, a family court judge decides that splitting the singular retirement account is the fairest judgement. With a spousal IRA, sometimes these problems can be prevented.
And of course, opening two IRAs simply means two opportunities for saving. Couples who go this route can find themselves more prepared for retirement someday.
For more details on spousal IRAs, just give us a call. We’ll answer your questions and help you decide if this option is available to you.