A Publication of WTVP

Working couples need to coordinate their efforts in a way that supports their combined objectives.

The “typical” American family—as reflected in the iconic television shows of the 1950s and 1960s—is firmly in the minority. By 2012, the Bureau of Labor Statistics reported that six in 10 families with children have two working parents. What’s more, the majority of Americans feel they need dual incomes in order to reach their financial goals, according to Forbes.

For a major goal like retirement, working couples need to be especially vigilant to coordinate their planning efforts in a way that supports their combined objectives. As you and your spouse execute your joint retirement strategy, keep the following tips in mind.

IRA Contributions and Deductibility
In 2015, you and your spouse can each contribute $5,500 to a traditional or Roth individual retirement account (IRA), if you have sufficient taxable compensation (or earned income from self-employment). If you are 50 or older, you can direct an additional $1,000 to your IRAs for a combined total of $13,000. Your eligibility to contribute to a Roth IRA is dependent on your filing status and modified adjusted gross income for the year. You also may be able to deduct all or a portion of your traditional IRA contributions if you satisfy IRS guidelines. For example, if you file a joint tax return and neither spouse is covered by an employer-sponsored retirement plan, traditional IRA contributions are generally fully deductible up to the annual contribution limit.

If you are both covered by an employer-sponsored retirement plan, traditional IRA contributions will be fully deductible if your combined adjusted gross income (AGI) is $98,000 or less. The amount you can deduct begins to phase out if the combined AGI is between $98,000 and $118,000, and no deduction is allowed if it is equal to or exceeds $118,000.

Similarly, if only one spouse is covered by an employer-sponsored retirement plan and the spouses file a joint federal income tax return, the spouse who is not covered may qualify for a full traditional IRA deduction if the combined AGI is $183,000 or less. Deductibility phases out for combined incomes of between $183,000 and $193,000, and is eliminated if your AGI on a joint return equals or exceeds $193,000. Note, however, Roth IRA contributions are not tax-deductible.

Coordinating Multiple Accounts
Like any investment portfolio, retirement accounts should work in unison to help you pursue a specific accumulation goal. However, with job changes so prevalent, it is likely that a couple may have multiple retirement accounts, including 401(k), 403(b) or 457 plans; rollover IRAs; and possibly defined benefit plans. Because of the range of investment options offered under such plans, it is important to keep the big picture in mind in order to maintain a coordinated investment strategy. As you review your accounts, ask the following questions:

Retirement Distributions
Couples nearing retirement need to decide the timing of retirement account distributions in light of their income needs, tax situation and market dynamics. Among the issues to consider are:

If one or both spouses are covered by a defined contribution (DC) and/or a defined benefit (DB) pension plan, you will typically be given several pay-out options to consider. These may include:

Social Security
You can begin receiving Social Security payments as early as 62, although delaying the election increases the monthly total. Married couples may want to consider first tapping one spouse’s benefit and delaying the other until age 70, which maximizes income and may substantially increase the couple’s total Social Security payout over a lifetime. Determining when and how to claim Social Security benefits is a complex matter involving many variables. Contact your financial advisor for assistance in considering the particulars of your situation. iBi

Cathy S. Butler, CFP, CRPC is a financial advisor with the Butler/Luthy Group of Morgan Stanley. For more information, visit