You need your own retirement plan. This is true regardless of
whether your spouse is covered at work or how much money, if any,
you earn. Fortunately, even if you have little or no income of
your own, you might still be able to open a spousal individual
retirement arrangement, or spousal IRA, based on yours and your
How spousal IRAs work
A common misperception about spousal IRAs is that they are
somehow connected to your spouse. Other than the fact that your
allowable contribution is based on yours and your spouse's total
earned income, a spousal IRA is just like any other IRA: It's
yours. It's in your name and your name alone. There is no such
thing as an IRA owned by two people.
If you already own an IRA account at a brokerage or other
financial institution, you can use it as your spousal IRA. You
don't need to open a special "spousal" IRA, and you certainly
don't need your spouse to open the account for you. If you earn
income in future years, you can continue to contribute to the
Your contributions to a traditional or Roth IRA are limited to
the lesser of:
- $5,500, or $6,500 if you are age 50 or older at the end of
the tax year.
- Yours and your spouse's total compensation that is included
in gross income, less your spouse's deductible and
nondeductible IRA contributions and Roth IRA
To qualify for a spousal IRA, you must be married to your
husband or wife at the end of the tax year, and you must file a
joint return. Your contributions to traditional and Roth IRAs are
also subject to the same rules as non-spousal IRAs. Your
contributions may be limited if you are a high-income
taxpayer. If you use tax software, the program should
calculate your maximum spousal IRA contribution.
You have until the original filing deadline, before any
extensions, to open an IRA and make a contribution for the prior
Here are three great reasons why you might want to consider a
1. Max out those contribution limits
One reason to have your own account and not rely solely on your
spouse's plan is that the contribution limits for IRAs, and many
other plans, are not terribly high. Consistency is the first key
to retirement planning success. To make real progress on
retirement savings, try to make the maximum contributions to both
your accounts, and make them every year.
2. You can take advantage of your biggest asset: time
The second key to successful retirement planning is timing. It's
the miracle of compounded earnings. Having your own IRA helps
start your saving for retirement as soon as possible -- and
getting started can be the hardest part. If you wait until you go
back to work to start your account -- say, when the kids are
older -- you'll miss out on prime saving years. It's a lot harder
to create a fund that will sustain you in your retirement years
if you wait too long to get started.
3. Take ownership in your retirement
The third reason you should have an account in your name is that
it gives you a feeling of ownership and involvement. Most
marriages have one partner more interested in money management
and investing than the other. That's fine. However, you should
both know what's going on and where your money is invested.
Bonus: You're more likely to agree on financial goals and
understand how you're working together toward them when both
spouses feel like active partners.
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