For Mark Roberts’ Use: We often hear about the wage gap between men and women, but what does it really mean? Statistically, women do earn less than men, but of course we know those figures aren’t due to lack of education or skill. This situation often arises simply because women tend to take more time away from their careers when having children or providing care to other family members.
As retirement planners, this raises a particular issue for us. Not only do women tend to earn less; that often means they save less for retirement, too. According to one study by the Employee Benefit Research Institute, the average IRA balance among men amounted to $139,467, whereas women had saved only $81,700 in their retirement accounts. That’s an average retirement preparedness disparity of $57,767.
The number of female breadwinners is rising, but in the meantime, it makes sense that retirement savings are often put on hold while other life factors take priority. This situation sounds bad for women, but it affects the couple as well. When you both enter retirement, you will have less money saved than you otherwise could have.
Luckily, we do have a solution for this dilemma. If one spouse takes time away from employment (either male or female) the working spouse can help them shore up their retirement funds. A spousal IRA allows you to stash money in your spouse’s name, while enjoying the same tax benefits that you enjoy with your own retirement plan.
Of course, as with any retirement account, a spousal IRA is subject to certain rules and procedures. We urge you to contact us to learn more about this option, and together we can decide how a spousal IRA might fit into your overall retirement plans.