David Lerner Associates: Retirement Saving for Married Couples Meritus Media February 20, 2014 If youâ€™re married and plan to stay that way for the long term, then itâ€™s important that your retirement savings strategies reflect this. Retirement savings strategies for married couples may differ from strategies for single individuals. (Newswire.net -- February 20, 2014) Syosset, NEW YORK -If you’re married and plan to stay that way for the long term, then it’s important that your retirement savings strategies Retirement for married couples reflect this. Retirement savings strategies for married couples may differ from strategies for single individuals.
"The key is to determine how you and your spouse together can reap the most potential benefit from qualified retirement savings programs like 401(k)s and Individual Retirement Accounts (IRAs)," says Martin Walcoe of David Lerner Associates. "This includes not only the potential benefits of tax-deferred or tax-free savings, but also of possible tax deductions right now."
Questions to Ask
Start by sitting down together and answering a few questions:
• How much money do each of you earn (assuming you both have income-earning jobs), and what is your total annual adjusted gross income (AGI)? • Given your AGI and your living expenses, how much can you realistically afford to contribute to one or more qualified retirement plans? • Do either (or both) of your employers offer a qualified retirement plan, such as a 401(k) plan? • If so, does the employer offer a matching contribution — for example, an extra 50 cent contribution for every one dollar you contribute, up to a certain amount? • Does the employer’s plan offer a wide range of well-diversified investment options that are highly rated and have reasonable fees?
• Do you and your spouse consider yourselves to be relatively sophisticated investors who are comfortable making investment decisions? Or do you prefer to take a simpler approach by choosing to work with a financial advisor?
The answers to these questions will determine which retirement savings options are available to you, how much money you should contribute to these plans, and how you should go about investing the money. For example, if one or both of your employers offers a qualified plan, this might be the best place to start, especially if the employer offers a matching contribution. This is about the closest thing you can find to “free money,” so it may be smart to contribute at least enough to receive the full employer match.
If neither employer offers a qualified retirement plan, then you may need to consider your options for opening a retirement account on your own. Opening an IRA with your bank or an investment advisor may be a wise choice, as this may provide you with a wide array of potential investing options. If so, you’ll need to decide whether to open a traditional or a Roth IRA.
What’s the Difference?
Traditional IRAs are funded with pre-tax income, and you might receive a current tax deduction for these contributions, and, taxes generally must be paid on the money when it is withdrawn. Conversely, Roth IRAs are funded with after-tax income, so there is no current deduction for contributions. However, Roth IRA earnings are tax free upon withdrawal.
Qualified retirement plans generally have annual maximum contribution limits, so depending on how much you and your spouse want to save for retirement, you might consider opening an IRA in addition to contributing to an employer-sponsored plan. Keep in mind, though, there are income limitations on opening and contributing to Roth IRAs. Also, if you or your spouse is covered by a retirement plan at work and your AGI exceeds certain thresholds, your traditional IRA deduction may be limited or disallowed.
Finally, be sure that your retirement plan beneficiary designations reflect your wishes. If your desire is to have your retirement plan assets go to your spouse upon your death, make sure he or she is listed as the primary beneficiary on all your retirement accounts.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC.
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