When Ramsey Solutions conducted The National Study of Millionaires, we found a shocking majority of millionaires had this one thing in common—they were in a strong, healthy and long-lasting marriage.
It's not too surprising when you think about it. 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!
Maybe you haven’t been married that long. Maybe you’re in a second marriage. Or maybe you’re 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, consistency, intentionality and hard work—are also the key ingredients to building wealth.
6 Investing Tips for Married Couples
It’s up to the two of you to work together, communicate clearly with each other, and 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!
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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. In fact, a Ramsey Solutions study showed that money is the number one issue married couples argue about. Whether it’s figuring out a strategy to get out of debt or saving for retirement, you and your spouse need to see eye to eye on 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 talk about what you both want retirement to look like.
When the two of can see every detail of your dream retirement in your mind’s eye as if it was projected on a high-definition TV—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 three to six 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 could 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 amounts to 15%, but what it boils down to is this: You and your spouse should invest 15% of your combined gross household income into retirement.
So if you’re both working, you invest 15% of your income into retirement accounts in your name—that’s your 401(k) and Roth IRA—and your spouse invests 15% of their income into theirs. 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. It’s that simple, people!
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 must file a joint tax return in order to put money into a spousal IRA.
What if we’ve maxed our 401(k)s and IRAs?
If you’ve maxed out your tax-advantaged accounts like a 401(k) and your 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.
This is a lot to keep track of! An investing professional can sit down with both of you to 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 track of. Not only can hefty fees eat into your earnings, but it 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. Do not—we repeat, do not—bring that money home! You want to do a direct transfer, which moves the money straight from your old 401(k) into the IRA.
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. Financially, that’s one of the first things you need to do once you get back from that honeymoon in Hawaii!
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, you’ll want to 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 that 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 to 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 if 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 in place will give peace of mind to you, your spouse and your loved ones. And you can’t put a price tag on that. My friends over at Zander Insurance can give you a free quote on a term life policy in minutes. 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, probably the wisest man 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 help you work toward your goals together.