One Income, Two Retirements

One Income, Two Retirements – seems to be a thing of the past.  Most families need both husband and wife working to make ends meet.  The concept, however, is still applicable as spouses move in and out of the workforce for numerous reasons.

Source: Business Week Online

IRAs for nonworking spouses let you build your own nest egg — and in many cases, the contribution will be tax-deductible

Spouses drop out of the workforce for all sorts of reasons — to rear children, write a novel, or just get away from it all. Such noble pursuits have one serious drawback, however: Often, they mean leaving behind company-provided retirement-saving plans. Also, individual retirement accounts, 401(k) plans, and Social Security benefits are generally geared toward providing retirement income to people who earn salaries. Couples that include one working and one nonworking spouse face funding two retirements out of one income. And that challenge is magnified if something happens to the employed partner — as was the case with many families affected by the September 11 terrorist attacks.

All of these are good reasons to plan ahead for every contingency. When it comes to retirement, that means creating and contributing to a spousal IRA — starting right now. The spousal IRA allows a married spouse who files jointly to contribute $2,000 a year to both his and her IRAs, as long as the working spouse earns at least $4,000 a year. This type of IRA can be either a traditional plan funded with pretax dollars if the contributor is eligible or a Roth IRA funded with aftertax dollars.


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