When you work side by side with your spouse toward a common goal, there’s almost no limit to what you can do—including building outrageous wealth that’ll change your family tree for generations.
Maybe you’re a couple of googly-eyed, lovestruck newlyweds. Maybe you’ve found happiness in a second marriage. Or maybe you’re just wondering what saving for retirement looks like for two people and how to make your nest egg last.
No matter what situation you find yourself in, the same things that lead to a healthy marriage—commitment, intentionality and hard work—are also the key ingredients to building wealth.
6 Investing Tips for Married Couples
You have to work together to reach your retirement goals. It doesn’t matter if you’re just getting back from your honeymoon or you and your better half have been married for 25 years—you and your spouse have to invest in each other!
Now, here are some things you can do as a couple to make sure you’re being smart with your investments and your retirement goals.
1. Talk about your retirement goals together.
If you haven’t figured it out by now, you and your spouse aren’t always going to see eye to eye on things. You want to pick up a pizza for dinner, but she’s in the mood for tacos. You’d like to go to the beach this summer, but he’d rather take a trip to the mountains.
Money is no different. Messy spending habits and financial infidelity—lying about money—can strain even the strongest relationships. In fact, money is the number one issue married couples fight about. So whether it’s figuring out a strategy to get out of debt or saving for retirement, you and your spouse need to get on the same page with your financial goals.
We want you both to start dreaming about what you want retirement to look like. What do you want to do? Where do you want to go? When do you want to retire? After you’ve really thought things through, set up a dream meeting with your spouse to imagine being retired.
When the two of you can see every detail of your dream retirement in your mind’s eye, you’ll both be ready to do what it takes to get there.
2. Understand your investment options.
Okay, first things first: We recommend investing 15% of your gross income toward retirement once you’re completely out of debt and have a fully funded emergency fund in place (that’s 3–6 months of expenses saved up). Make the most of tax-advantaged accounts, like your work 401(k) and a Roth IRA. And make sure to invest in growth stock mutual funds with a good track record.
Here are some of the most common questions we get from married couples when it comes to saving for retirement:
Can we have a joint retirement account?
A lot of folks ask if they can invest in the same account as their spouse. And while we do recommend combining your finances once you’re married, you can’t open a joint 401(k) or Roth IRA like you can with a bank account. There is an “i” in IRA—and it stands for “individual.” That doesn’t change once you’re married.
Now, there are joint taxable investment accounts available, but you shouldn’t invest in those until you’ve maxed out contributions to your tax-advantaged accounts. More on that a little further below.
What exactly does 15% mean?
Some married folks also get confused about what it means to save 15% for retirement, but it boils down to this: You and your spouse should invest 15% of your combined gross household income into retirement.
Market chaos, inflation, your future—work with a pro to navigate this stuff.
So if you’re both working, you each invest 15% of your income into retirement accounts in your name—that’s your 401(k) and Roth IRA. And if you live in a one-income household where one spouse works and the other stays at home, you just invest 15% of the working spouse’s income.
For example, if your salary is $70,000, you should be investing $875 a month. Do that for 30 years at an 11% annual rate of return and you could retire with about $2.45 million in your nest egg. It’s that simple!
My spouse works, but I stay at home. Does that mean I can’t open up a retirement account?
Don’t worry, you can still save for retirement with a spousal IRA! Spousal IRAs let working spouses contribute to an IRA for a nonworking spouse, and they have all the same bells and whistles a traditional or Roth IRA does. They still have the same contribution limits and income limits. It’s also worth remembering that you have to file a joint tax return to put money into a spousal IRA.
What if we’ve maxed out our 401(k)s and IRAs?
If you’ve maxed out your tax-advantaged accounts (like your 401(k) and Roth IRAs) and still haven’t hit that 15% mark, a joint taxable investment account might be an option. These accounts allow you and your spouse to have access to the same investments. While you can take the money out of these accounts any time you’d like, there’s one really big problem: You pay taxes on any money your investments earn.
If this feels like a lot to keep track of, talk to an investing professional who can help you make sense of all your investment options.
3. Clean up your old retirement accounts.
Having a bunch of old 401(k)s from previous employers is a lot to keep tabs on. Not only can hefty fees eat into your earnings, but having multiple accounts can also cause some huge headaches when it comes to keeping your investments in order. So if you and your spouse have several retirement accounts from old jobs just hanging around, it’s time to clean things up a bit.
Once you and your spouse have all your old 401(k)s accounted for, we always recommend a rollover into a new IRA. That just means you’re moving your entire 401(k) account into an IRA. You want to do a direct transfer, which takes the money straight from your old 401(k) into the IRA.
Do not—we repeat, do not—bring that money home! If you do, you’ll have to pay a 10% early withdrawal penalty plus state and federal income taxes on every penny. No thanks.
4. Update your beneficiaries.
When you get married, you need to revisit who you have listed as beneficiaries on all of your financial accounts—and that includes your retirement accounts. Seriously, as soon as you get back from your honeymoon—and even before you start writing thank-you cards to your aunts and uncles—make sure your accounts are in order.
Some employer-sponsored retirement plans will automatically name your spouse as the beneficiary, unless you name someone else and your spouse has signed off on it. Either way, don’t leave that to chance. If you want your spouse to inherit your retirement accounts, make sure they’re listed as your beneficiary.
5. Protect your loved ones with life insurance.
We know you’re thinking, What does life insurance have to do with investing? A lot, that’s what!
If you have loved ones who depend on your income, you need life insurance to protect them if anything happens to you. It’s not a fun topic to talk about, but believe us when we tell you your spouse will be grateful you took the initiative to have the hard conversations.
So how much life insurance will you need? We recommend getting a 15- to 20-year term life insurance policy worth 10–12 times your annual income. The same goes for your spouse too.
If you’re consistently investing 15% of your income toward retirement for 15–20 years, chances are you’ll be self-insured by the end of your life insurance term. That means you won’t need life insurance anymore—because when you pass away, you’ll have enough saved up to pay for anything an insurance company would’ve covered. Goodbye, insurance premiums!
But in the meantime, having life insurance will give peace of mind to you, your spouse and your loved ones. And you can’t put a price tag on that. Use our term life insurance calculator to easily figure out how much term life insurance you need. Don’t put it off!
6. Work with an investment professional.
There are no ifs, ands or buts about it: If you’re going to reach your retirement goals, you can’t do it alone. King Solomon, one of the wisest men who ever lived, wrote: “Where there is no counsel, the people fall; But in the multitude of counselors there is safety” (Proverbs 11:14 NKJV). That’s why you need to assemble a dream team of advisors to help you navigate through complicated financial issues.
If you don’t already have an investment professional who can sit down with you and your spouse, we recommend reaching out to one of our SmartVestor Pros. They can help you go over all your investing options so you can get a plan in place to start working toward your goals.
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This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.