Many couples, like my wife and I, only have access to one 401k. My wife does photography as a hobby and is a stay-at-home mom. Unfortunately, the last time I checked, stay-at-home moms are not given a 401k option (although, maybe they should!).
So how do I maximize my current 401k to ensure my boo is by my side sipping pina coladas as we grow old together? Here are some great strategies on planning for retirement for both you and your special someone with only one 401k plan.
Side Hustle Supplement
Uber. Young Living Oils. Usborne Books. Avon. Photography. Baking. Etsy. Professional garage seller. If your partner is making a little extra cash you two can use it to fortify your future. Instead of spending the extra money, invest a little more into your 401k.
Be Ready to Pivot
Each month, take a look at your expected expenses and prioritize your 401k. Calculate the max you can contribute to your 401k that month while still having enough to live your life. Once you have your 401k budget set, adjust your deferral rate accordingly. Adjust it again up or down next month or as needed. This will require you to to be a bit more hands on and you’ll need to plan ahead...but hey, no one said this would be a cakewalk.
401k “Savings Account”
Maybe the previous option of changing your deferral constantly is too much of a pain. Another great option is putting money aside in a savings account. Once you’ve saved $1,000, put it into your main bank account, change your 401k deferral to pull out an extra $1,000 from your paycheck, and you’ll never know the difference!
This one has a few rules so make sure you check out the IRS guidelines. Typically, you can contribute to an IRA only if you have earned income. However, a spousal IRA allows a husband or wife to save on behalf of the non-working spouse.
A spousal IRA provides a way to boost your retirement savings as a couple while giving the spouse access to the same wide variety of investment choices, ranging from mutual funds and exchange-traded funds (ETFs) to individual stocks and bonds. The 2018 max contribution limit is $5,500 ($6,500 for investors age 50 or older) and contributing this amount each year could make a real difference in a couple's retirement savings over time.
So for this valentine’s day, show your spouse you really care by making that extra 401k contribution. Take my word...nothing says “I love you” more than an extra 401k contribution. Here’s to pina coladas in retirement!