Should You Open a Spousal IRA?
You’ve heard a lot about the wage disparity between men and women. So it probably comes as no surprise that retirement savings differ between the genders as well. A 2014 study by the Employee Benefit Research Institute uncovered a significant gap in the savings of men and women.
According to the study, the average IRA balance among women is $81,700. Among men, the average balance is $139,467. Men have saved, on average, $57,767 more than women!
A large part of this disparity may be due to the fact that women are more often the ones taking extended time off from their careers. It makes sense that if a woman is not working outside the home, she is probably not contributing to a retirement account. And of course, when she does reenter the workforce, she may face lower wages and reduced saving power.
In the past, women often relied on their husbands to provide a comfortable retirement income. But divorce was less common back then, too. These days, women should take measures to save an amount equal to their male counterparts, or they could face a reduced quality of life in retirement.
A spousal IRA makes it possible for women to catch up in the retirement savings game. All of the typical tax benefits and contribution limits of other IRAs still apply, but the spousal IRA allows the employed spouse to set aside retirement funds for the unemployed spouse. Women (or men, for that matter) who are considering taking time off from their careers should consult with their spouse about opening and funding a spousal IRA during that time. Then, when they reenter the workforce at a later date, their retirement savings are on equal footing with their spouse.
As with any other retirement savings vehicle, a spousal IRA is subject to some complicated rules and procedures. Talk with your financial planner about the benefits and possible tax complications of funding this type of retirement plan.
Share This Story, Choose Your Platform!
In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution.
Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies.
Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.”
Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.