The Hidden Gem of Retirement Planning: Spousal IRAs

Have you ever wondered how marriage can offer financial security, especially when planning for retirement? Beyond the health benefits, tax perks, and increased borrowing power, one lesser-known advantage married couples should consider is the Spousal IRA.

What is a Spousal IRA?

A Spousal IRA can be either a Traditional or Roth IRA, but it's uniquely designed for married couples where one spouse has little to no taxable income—perhaps due to unemployment, caregiving, or education.

Who Owns It?

Once contributed, the money in a Spousal IRA belongs to the spouse in whose name the account is. It's an excellent financial safeguard, especially for stay-at-home parents or those temporarily leaving the workforce.

Eligibility Criteria

• Must be a married couple
• Must file joint taxes
• One spouse must earn enough to cover both their own and the spousal IRA contributions. For instance, in 2023, if you're under 50, you can contribute up to $6,500, meaning the earning spouse should make at least $13,000 to maximize benefits.

Tax Benefits

You can choose a Traditional IRA to reduce your taxable income now or go for a Roth IRA to enjoy tax-free withdrawals later in life. Remember that tax deductibility may be limited if the earning spouse already has a workplace retirement plan. ?To find out more about these types of accounts, go HERE.

Why Should You Care?

According to the Department of Labor, in of July 2023, civilian labor force participation rates period were 57.4% for women and 68.4% for men (ages 16 years and over). For many families, focusing on immediate financial needs overshadows retirement planning. However, with stats showing that many Americans are significantly underfunded for retirement, Spousal IRAs offer an opportunity to help bridge that gap.

No Excuses!

Even if maxing out contributions isn't feasible, contributing anything below the $6,500 or $7,500 limits still accrues benefits. Remember, there's no loan to provide you with a comfortable retirement, so as you budget for your monthly expenses, remember to pay yourself first!

Investing in a Spousal IRA is a practical and wise choice for many couples. So, if you are married and one of you is considering leaving the workforce, don't miss this opportunity to protect your financial future!

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