Should a married couple have individual retirement investing plans?

[Anaya_1de]

Hello I'm new to this forum and I'm in need for some good advice.

I'm 23 and I would like to get started on my retirement savings. Because I know the younger you start the better. Well, my husband is 32 and he already has a Roth IRA and a 401 K and when I told him I wanted to open my own Roth IRA he didn't really think it was a good idea. His reasoning is that if we just put all of our savings into his retirement accounts we will be able to have all of our retirement money when it's time for him to retire -which will be 9 years earlier than my retirement. That sounds like a good point to me but I'm wondering what if something happens to him? He said that I would get the money that's in his retirement accounts but doesn't that hurt any investment plans if it get cashed out early?

Anyway I think my husband feels as if I'm doing this because I don't really trust him and don't think our marriage will last. It's not like that at all though. I love my husband and trust him 100% I just don't want to be caught in the rain. And I think the smartest thing for us would be to both have our individual retirement plans.

I just would like to hear what married couples usually do? Is it common to just have one partner with a retirement plan where both people put their savings. (BTW I know the Roth IRA is not a joint retirement plan) Would that even be smart? Why or why not? Are there any joint retirement plans out there? And why should or shouldn't I have my own retirement plan.
If somebody could explain this to us I would really be grateful!

Thank you in advance for your time and advice!

 

[crazy connie]

There are a lot of reasons they are called individual! It is each individuals responsibility to provide for their future.

You need to get yourself armed with knowledge and make good choices for your future.

Why do you think the Fed's allow IRA contributions to a non employed spouse? So, they can have a long term personal retirement savings plan.

Two individual plans allow twice the amount of money to be deferred.

I do not know of a single person in my circle of business associates and friends who has not established their own plan.

 

[Cut-Throat]

Well, IRA's whether Roth or regular are individual plans. So to maximize your savings and minimize your taxes you both want your own individual IRAs and 401K plans. IF you are currently maximizing your husbands IRA, what are you doing with any excess money?

Your husband is either deceptive or does not have a clue about what he's doing!

 

[mickeyd]

Hey Anaya,

Are there any joint retirement plans out there? And why should or shouldn't I have my own retirement plan.

By law, all qualified retirement accounts need to be individual, not joint. You should indeed have your own Roth IRA. This is a way for you and DH to double your annual savings amount.

I view the retirement accounts of DW and myself as ONE account. I set the asset allocation as if it in only one big bunch of $. If you assume that you will be married when your retire, it makes no difference which account contains the highest balance. What is important is what the total amount is with all accounts added together (his and hers).

The only reason that I can imagine why you should not have your own Roth is that you need the money to live on and you can not afford to fund both. If that is the case, fund half to his account, half to your account.

 

[rs0460a]

I'll give you some advice (same as your parents would tell you )....

Marriage is a partnership, quite like two of you being in the same rowboat, with your own oar. If only one of you has an oar (your husband's retirement $$$) you will go around in circles (not much fun - not much progress).

However, if both of you match your oar strokes you will make much more/better progress to where you want to be.

Apply the same role to all the things you do together (that's why they call it a "marriage") and things will turn out OK.

I know - my DW/me have been rowing our own boat for over 37 years - and we've made much progress in our "journey" together.

- Ron

 

[macdaddy]

He will hit 59 and 1/2 way before you do, so this would be one argument to fully fund his, before funding your own. If a couple were the same age, it wouldn't really matter. But if you can afford it, you should certainly fund both yours and his.

 

[mb]

To add to C-T's post if you work and your company has a 401k with matching then you will be missing out on some "free" money.

My opinion is that you should establish retirement accounts in your name.

I manage all of our investments including DW's 401k just because I'm more interested in it than she is. (She has an MBA and is very capable of doing it herself.) Even so I wouldn't dare to suggest to her that it should all be in "my" account. Sort of harkens back to the "bad old days" when men controlled the money and women were bare foot and pregnant.

The counter argument to your husband is that you will be able to defer taxes longer if you choose to do so in your account. (IRRC you don't have to take mandatory withdrawals from Roths so this argument doesn't apply there.)

Not sure but if you separate I suspect that you will be entitled to half of his retirement accounts?

MB (married 27 years and both me and DW have maxed out our 401k for most of those years)

 

[samclem]

Yep, you should each have your own accounts, it is the only way you can maximize the amount you can put away in tax deferred accounts. My wife and I do this, and everyone I know does it. Also, my wife has earned only a little money over the time we've been married, but our deposits into her account have always been identical to mine (ever since we've been able to make spousal contributions).

Observations:
- As noted, your husband either doesn't know the rules or he doesn't think you need all the info. This might just be a mix-up, but it is a sign that you need to take some time to educate yourself. This forum is a good place to start.
- You are investigating ways to save for your (shared) retirement. It is significant that you are concerned that he could believe you are not 100% committed to your marriage because you are doing this.

Best of luck.

 

[Rich_by_the_Bay]

There are lots of insecurities around money in all marriages, even the good ones. But on this issue, financial considerations alone warrant separate accounts. Believe it or not, someday you'll probably be looking for ways to stretch your tax deferred opportunites.

Age 57 and 55, my wife has an individual 401 and I have my own IRA and 403b.

That said, I'd max any employee contributions that your employer matches into both of your accounts, then max out his, then max out yours in that order to the extent that your income and expenses allow. He'll realize that two accounts works out best for both of you.

 

[ats5g]

Hello I'm new to this forum and I'm in need for some good advice.

I'm 23 and I would like to get started on my retirement savings. Because I know the younger you start the better. Well, my husband is 32 and he already has a Roth IRA and a 401 K and when I told him I wanted to open my own Roth IRA he didn't really think it was a good idea. His reasoning is that if we just put all of our savings into his retirement accounts we will be able to have all of our retirement money when it's time for him to retire -which will be 9 years earlier than my retirement. That sounds like a good point to me but I'm wondering what if something happens to him? He said that I would get the money that's in his retirement accounts but doesn't that hurt any investment plans if it get cashed out early?

Anyway I think my husband feels as if I'm doing this because I don't really trust him and don't think our marriage will last. It's not like that at all though. I love my husband and trust him 100% I just don't want to be caught in the rain. And I think the smartest thing for us would be to both have our individual retirement plans.

I just would like to hear what married couples usually do? Is it common to just have one partner with a retirement plan where both people put their savings. (BTW I know the Roth IRA is not a joint retirement plan) Would that even be smart? Why or why not? Are there any joint retirement plans out there? And why should or shouldn't I have my own retirement plan.
If somebody could explain this to us I would really be grateful!

Thank you in advance for your time and advice!

Anaya,

For Roth IRAs, you can withdraw your contributions at any time. See IRS Publication 590.

DW and I each have retirement accounts. We each have a 401(k), in which we get matching contributions. And once we're able to contribute to Roth IRAs, we'll probably each have one because we can each contribute $4,000 to our own Roth IRA [hence double the contribution]. However, in the first few years of contributing to a Roth IRA, I forsee that we'll only have enough extra $$ to contribute to one Roth IRA. That may be the case you're in.

Ahh, the old "Don't you trust me?" comeback. In my limited marriage experience, involving both parties [while creating some initial strife] initially in things like retirement planning, bill paying, house remodeling, etc, allows both parties to voice their concerns and solutions. Then, and this is probably the most important, discussion occurs in which concerns are addressed. Not only does this give both parties a stake in the decision, it should prevent a lot of the suspicions in later "what the F*** is he/she doing?" thoughts. Hint: it should actually prevent a lot of later sneaking around [peaking at each other's email, checking accounts, retirement accounts] to see if you're getting screwed. At least that's how it's supposed to work.

It's sometimes hard for newly married couples to break down the walls between the different lives, particularly if one/both partners are older and already have their "system" in place.

- Alec

 

[HobbyDave]

His reasoning is that if we just put all of our savings into his retirement accounts we will be able to have all of our retirement money when it's time for him to retire -which will be 9 years earlier than my retirement.

As someone already said, you don't need access to all your money at retirement (unless you plan on blowing it all in the first few years). You will only need access to 9 years worth. So there is no reason to put it all in his account just to have access to it earlier.

That sounds like a good point to me but I'm wondering what if something happens to him? He said that I would get the money that's in his retirement accounts but doesn't that hurt any investment plans if it get cashed out early?

When you hit retirement age, you don't "cash out" early (at least I really hope you don't plan on it). It stays in the account. So in that way, yes, you would get the account if he kicked the bucket.

Anyway I think my husband feels as if I'm doing this because I don't really trust him and don't think our marriage will last. It's not like that at all though. I love my husband and trust him 100% I just don't want to be caught in the rain. And I think the smartest thing for us would be to both have our individual retirement plans.

It is not about "trust", it is about doing what is smart. There is no reason to NOT have an account, and there are many reasons to have the account. I don't care how much you love & trust your husband, 95% of marriages also start that way. Everyone thinks they're different, but there is still the chance either you, or your husband will decide 3/5/15 years from now that they would rather get a divorce. It happens, you know it happens, we all know it is possible. There is no reason to screw yourself by letting him have all the retirement accounts.

I just would like to hear what married couples usually do? Is it common to just have one partner with a retirement plan where both people put their savings. (BTW I know the Roth IRA is not a joint retirement plan) Would that even be smart? Why or why not? Are there any joint retirement plans out there?
And why should or shouldn't I have my own retirement plan.

Every married couple I know has their own individual retirement plans. If your company has a 401k, you need to get contributing into that as well. If there is extra money after putting your 401k in, and your husbands, then you can split contributions into each retirement account.

As I mentioned before, there is no reason to have only one account, and there are plenty of reasons you would want your money split. There are no joint retirement plans (you can always open a joint stock account, but that should wait until all retirement accounts are maxed).

 

[Patrick]

62% of marriages result in divorce. Do you think you can beat the odds?

 

[shiny]

Anaya,

You should have your own retirement account.

I never practiced family law, but have seen plenty of divorces where the wife didn't work and the main asset of the marriage was the husband's retirement account. Its not a pretty situation. I know, I know, your marriage is secure and you don't want it to be an issue in your marriage. The thing is, your husband should want you to have your own account and here are some reasons why:

You can double the amount you are allowed to put in and let grow.

When he hits 72.5 and is having to take mandatory distributions then yours will still be growing tax deferred.

Like others said, if its a 401k you get the "free money" match, if it is a Roth then you have lots of flexibility for taking out early and if it is a traditional IRA then you can take a larger tax deduction (if you meet the income qualifications).

You are young and have a long time for that money to grow - get in the game! You'll never have this opportunity again.

shiny

 

[samclem]

62% of marriages result in divorce. Do you think you can beat the odds?

I hope she and her husband believe they can. We all believe it, or we wouldn't marry.

 

[Patrick]

I hope she and her husband believe they can. We all believe it, or we wouldn't marry.

Good point. Hope for the best, prepare for the worst.

 

[yakers]

While I would suggest you have your "own" retirement, the asset allocation planning should be done together. Its good to have taxable, tax deferred and tax free funds to have withdrawal choices when retired. Also you should look at different investment options you each have that would work well together. My wife had certain choices in her 403b that were different from my TSP/401k, we had more international and small caps in her funds. You want to plan to use these together, maybe you have a better bond fund than your husband.

 

[mathjak107]

we made one big complementry mix between my wife and i. since we use specific model portfolios we both buy the same funds in our taxable and retirement accounts and all accounts mesh together..

 

[LRS]

I encourage all young women to educate themselves about personal finance. There is nothing wrong with a married woman taking charge of her own financial well-being, in addition to being a full partner in all the business and financial dealings that married couples transact.

Hub and I have been happily married for many years--we definitely "beat the odds". But I have my own pension from my job and my own Roth IRA. I wouldn't have it any other way, and neither would my husband. I do most of the research when it comes to investing and planning, because that is my interest. But nothing goes forward without fully discussing things with my business partner, i.e. Hub.

 

[mb]

While I would suggest you have your "own" retirement, the asset allocation planning should be done together. Its good to have taxable, tax deferred and tax free funds to have withdrawal choices when retired. Also you should look at different investment options you each have that would work well together. My wife had certain choices in her 403b that were different from my TSP/401k, we had more international and small caps in her funds. You want to plan to use these together, maybe you have a better bond fund than your husband.

This is a good point.

My 401k has a couple of good index funds and a couple of large cap managed funds but little else. I put all of my contributions into the index funds.

DWs 401k also has a REIT fund, a TIPS fund and a couple of others that I don't have that add diversity.

MB

 

[azanon]

It is not about "trust", it is about doing what is smart. There is no reason to NOT have an account, and there are many reasons to have the account. I don't care how much you love & trust your husband, 95% of marriages also start that way. Everyone thinks they're different, but there is still the chance either you, or your husband will decide 3/5/15 years from now that they would rather get a divorce. It happens, you know it happens, we all know it is possible. There is no reason to screw yourself by letting him have all the retirement accounts.

Finally, someone that gave Anaya the right answer for the most right reason. Kudos Ceberon.

Anaya, first, if your new here, these guys here are extremely wrapped up in how much money you can make over time and everything else is secondary. Now there's nothing wrong with that, and I kinda have those thoughts myself, but its not exactly what YOU need at the moment. Most of the people here (not all) are well over 40, and have had decades to verify their marriage is stable.

From a young person to a young person, dont listen to your 32 year old husband who thinks he's your wiser by suckering you into fully funding HIS retirement plans and putting only 2 things in yours (jack and sh**). Yes, yes, you guys love each other today, but do you know what the national divorce rate is? Its like approaching 60%. Yes, i understand we humans are arrogant, and everyone is convined they're the 40% until they find out otherwise.

Let him say he loves you and show you he loves you every day. But have him back that up by funding your retirement account as well (or both of you do so), and also make sure you have at least a modest life insurance policy (100K minimum) too. And while he's at it, research disability policies too.

I'm not a lawyer, but personal IRAs are probably not easy to touch in divorce. I'd start worrying less by insisting on having one my own..... but that's just me.

If you want to find the core of a man's heart, follow the money.

Azanon

 

[justin]

There's always the QDRO to get at the IRA/401k assets. It's very common, since for many folks this is a large portion of their assets. Qualified Domestic Relations Order (or at least that's what it's called in my state). One spouse would have a right to collect a portion of the retirement account assets of their ex-spouse at the time of distribution with a QDRO. These QDRO's go on file at the IRA/401k custodian's office (just to make sure your ex-spouse doesn't "forget" to pay you ).

But the better plan is to fund your own IRA. That's money in your pocket that you control and you decide when to distribute and in what amounts (whether through a 72t early distribution, to pay for kid's college, or at 59.5). There's no reason not to.

 

[shiny]

Qualified Domestic Relations Order (or at least that's what it's called in my state). One spouse would have a right to collect a portion of the retirement account assets of their ex-spouse at the time of distribution with a QDRO. These QDRO's go on file at the IRA/401k custodian's office (just to make sure your ex-spouse doesn't "forget" to pay you

Yes, this is what I was thinking of when I said that dividing this asset "isn't pretty." Its not a clear division of property that allows the parties to move on, they are tied to one another through retirement with the parties most of the time continuing to feel that they got a bad deal.

I've been thiking about this question since yesterday - it seems to me that marriages have a better chance when both parties feel they are protected financially. If all the money is in one spouse's name then that spouse has control of the other's future - I would really worry that this is just the beginning of controlling behavior

Things are rarely ever "equal" but you, and all married people who consider themselves a "team" financially should structure their investments so they don't completely favor one of them.

 

[Caroline]

There's a lot of great advice here - it ALL seems to be running in favor of having your own accounts. Several of them have suggested, reasonably enough, that your marriage might not last. But what if it does? Won't everything be alright if you're together forever?

Possibly not.

My father-in-law just died. He was very successful and left his wife of 58 years with plenty of money and a house in one of the most expensive neighborhoods in the country. While he was alive he INSISTED on taking care of all things financial. He made ALL of the decisions, knew where ALL of the accounts were, did ALL of the talking with the lawyers. She was expected to sign papers as they were put in front of her and keep her mouth shut. She asked regularly to understand more -- especially as he became ill and his death became inevitable -- but he swore that he had it all under control.

Now that he's dead -- CHAOS!!!! She doesn't know what she's got, where it is, or most important, what to do with it once she finds it. (Turns out he didn't have it all under control after all.) Having gotten through the trauma of his death from cancer she is now faced with the job of trying to understand investments and concepts she's never heard of. She tells me that she's so troubled that she hasn't even had time to grieve. What she does seem to have time for is a burning anger at his having shut her out, and at herself for having let him do it.

You sound confused and a little uncomfortable about this issue. If I'm right, I recommend that you sit with that feeling for a full minute, and experience it completely. Feel the little knot in the stomach if you have one, the flurry of questions in your mind, the distrust you are trying to ignore but which keeps coming back. Now, imagine feeling that way for ALL the rest of your life together, right up untill you're a white-haired, almost-deaf widow of 83 with shaky hands and a mountain of financial documents on your dining room table.

Your husband is probably a good guy who loves you and thinks that as the oldest and most experienced, he knows best. (I was in a relationship with a man 13 years my senior when I was your age -- I know of what I speak.) Sometimes, he probably DOES know best.

But YOU are an adult also. Whether or not he understands that -- YOU need to understand that. It's up to YOU to decide whether you can learn to live happily in ignorance and let him make financial decisions, or whether you want to understand and have a say in financial matters. Whatever you decide, you want to get this type of thing settled early in the marriage, because patterns are much harder to break once established.

Quite apart from the relationship issues, you want to know this stuff because it feels GOOD to master financial concepts and to feel in control of your life. ;-)

As someone here said, you're off to a fabulous start by consulting this board. I wish I'd been that savvy at 23. Keep up the good work!!!

 

[azanon]

Things are rarely ever "equal" but you, and all married people who consider themselves a "team" financially should structure their investments so they don't completely favor one of them.

Mine's definitely tilted in my favor, but its only because i also have a 401(k) (TSP), and she doesnt. We both fully fund our Roths though every year. I do small things to help the inequity by, say, funding hers first every year (it makes a difference). But Ive almost been in the federal government long enough (and married to her) that she'll be entitled to half of my pension whether we stay together or not. On top of that, my parents would disown me if I left her (since they probably like her more than me), so she's sitting pretty atm.

Caroline, i agree with your post and your concern, but i guess that situation wouldnt be true in every clueless spouse's case. In my case, i have given my wife one piece of paper kept in an undisclosed location that gives her user/passwords to every account i have. Then again, if she didnt have that, all she'd have to do is just let the mail come in and within 3 months, she should have a statement for just about every account i have. And in most of those accounts, i directly listed her as a beneficiary in the event of my demise (effectively nullifying the need for a will in those cases). So i guess for someone with a really complicated financial struture that would be a fear, but for me, i just own a house, a couple of cars, 2 money market funds, and about 15 mutual funds with varying amounts of money in them.

 

[brewer12345]

i just own a house, a couple of cars, 2 money market funds, and about 15 mutual funds with varying amounts of money in them.

What if your survivor had no clue what a mutual fund even was? I think that keeping both spouses educated is an excellent idea.

OP should definately have her own accounts and strive to learn about investing. It isn't hard, and it will serve you well.