Nearly a quarter of married-couple families in the U.S. have only one working spouse, highlighting the importance of strategic retirement planning for many households.
In a hypothetical scenario where a woman earns $75,000 annually and has $150,000 in retirement savings, with her spouse not working, planning for retirement requires careful consideration of various strategies.
Opening An IRA For The Nonworking Spouse
One effective way to save for retirement in this situation is to open a spousal individual retirement account (IRA). A spousal IRA allows the working spouse to contribute on behalf of the nonworking spouse, even if the latter has little or no income. This is a key strategy, especially when the nonworking spouse does not have an independent retirement account.
In 2024, each spouse can contribute up to $7,000 annually, or $8,000 if age 50 or older.
Social Security Benefits For The Nonworking Spouse
The nonworking spouse can collect Social Security benefits based on the working spouse’s earnings record. The benefit can be up to 50% of the working spouse’s benefit at full retirement age (FRA) while the spouse is still alive. However, if the nonworking spouse files for benefits before their own FRA, the benefit amount is reduced. It’s crucial to consider the best timing for taking Social Security benefits to maximize the couple’s combined benefits. After the death of one person, the living spouse, after they reach the age of 62, can collect their own Social Security benefit or the full amount of the deceased spouse’s benefit, whichever is higher.
Retirement Savings Credit For 2024
The Saver’s Credit, a nonrefundable tax credit, can provide significant savings for those with an adjusted gross income (AGI) below certain thresholds.
In 2024, the AGI limits are $76,500 for married couples filing jointly. Depending on the couple’s AGI, they could receive a tax credit of 10%, 20% or 50% of the first $2,000 ($4,000 for joint filers) that they contribute to eligible retirement accounts.
Customized Tips For A $75,000 Income
With a current income of $75,000 and $150,000 in retirement savings, the woman in this scenario should consider the following:
Maximize IRA contributions: Ensure both the working and nonworking spouse maximize their IRA contributions each year.
Diversify investments: Diversify retirement investments to include a mix of stocks, bonds and other assets to optimize growth potential.
Plan for increased contributions: As income or savings grow, increase contributions to retirement accounts accordingly.
Estimate retirement needs: Use retirement calculators to estimate the required savings for a comfortable retirement, considering inflation and healthcare costs.
By following these strategies and regularly reviewing their retirement plan, this couple can effectively prepare for a secure retirement within their 15-year timeframe.
Consulting with a financial adviser for expert advice can provide valuable insights tailored to their specific financial situation, helping to set them on the right track toward achieving their retirement goals.
*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes that the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.
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This article I Earn $75,000 Per Year And Have $150,000 In My Retirement Account, But My Husband Doesn’t Work — How Can I Plan For Our Retirement? originally appeared on Benzinga.com
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