Just because you don’t work outside the home doesn’t mean you can live on nothing in your old age.
If you are married and your spouse has qualifying income, you can contribute to a spousal IRA.
And you should.
The IRA rules for a nonworking spouse are essentially like the rules for an employed person:
- have a spouse with earned income
- contributions capped at $5500 or $6500 if you are over 50
- age less than 70 1/2
- choose between traditional IRA and Roth IRA
The Motley Fool has a fuller yet readable treatment of rules and options for spousal IRA’s.
So, even if paycheck comes with your spouse’s name on it, you can save for retirement in your own name.
Or plan to die young
I know that’s harsh, but it gets attention.
The alternative to taking responsibility for your retirement is, of course, to plan to die young.
Assuming that isn’t appealing, and you’d like to be comfortable and independent when you’re ready to retire, then get with some retirement savings.
The statistics on how unprepared we are as a society for retirement are sobering. The average American family has saved $3,000 saved for their old age.
I see it all the time in my bankruptcy practice: 50 and 60 year old couples with nothing set aside for when they can’t work. It leaves me heartbroken.
Remember, the average Social Security check is $1235. That doesn’t fund much of a life.
Don’t feed these horrifying statistics.
Set up an IRA
Opening an IRA is dead easy.
A bank, credit union, or brokerage firm can create one for you. If you already have an IRA, you can put your spousal IRA contributions into that existing account.
Because there are annual limits on how much you can contribute, every year you don’t make a contribution is a year lost. You can’t carry over the unused annual contribution to next year.
It takes discipline to save. But it pays off in the future.
Image courtesy of Petr Kratochvil.