When you get married, you presumably do so with the understanding that youll share your life with your spouse. That means youll talk about your plans for the future together and youll have shared aspirations for both the upcoming years and the later stages of life.
For instance, you might have some retirement goals that you both can work toward together. Those might be financial goals, such as retiring when you have a certain amount of money saved up, or lifestyle goals, such as retiring when you both reach a particular age, or planning a big trip when you do.
No matter the details of your retirement goals, you can take actions to get there faster. Here are three tips for doing just that.
1. Pay Off Debt
Debt is one of the most significant impediments to you and your spouse retiring. If you still have monetary obligations that stem from student loans, car loans, an outstanding mortgage on your house, etc., it will be much harder for you to retire.
You and your spouse should be on the same page about paying off debt if youre getting closer to retirement age. To start, consider the differences between the avalanche vs. snowball method for paying off debt.
If youre going the avalanche route, youll make the minimum payments on all of your outstanding debts, and then youll use any extra funds to pay off the debt with the highest interest rate first. While the snowball option, youll pay off the smallest debt first and then work your way up to the big ones.
2. Social Security Plans
You can talk to your spouse about what youll do when the time comes to claim your social security benefits. You can always claim social security based on your own work record. What individuals may not realize is that you can also claim a spousal benefit instead, based on their partners work record.
The Social Security Administration will give you the larger of the two amounts. If you want to retire faster, you might decide that you or your partners work record provides you with enough social security as monthly payments to justify resigning from your job at age 66 or 67, rather than waiting until youre older.
3. Spousal IRAs
IRAs are personal retirement accounts into which you put money aside each year to use when you retire.
If your household lives off of one income, you can open whats called a spousal IRA. Its essentially a regular IRA, but you open it in the name of the spouse who does not work. The working spouse contributes funds, so the two of you can get closer to retirement each year.
You can open a traditional spousal IRA or a Roth IRA. The Roth version means you contribute after-tax dollars, meaning there are no taxes to pay when you start to withdraw money to use during retirement. With the non-Roth or traditional IRA, you have to pay taxes on any money you withdraw after age 59 and ½.
Planning Together Lets You Retire Earlier
If you open up a spousal IRA in addition to your personal IRA, you can continue putting money into both accounts during your working life that will be there when you retire. The more you put in, the earlier you can start enjoying your Golden Years. Paying off all your debt is another essential step to take before you retire and paying it off fast will help your retire sooner. Its also important to discuss when you and your spouse want to start collecting your social security benefits.
If you talk to your spouse regularly about retirement, you can be sure both of you know what the plan is and how best to achieve it. If your goals ever change, you can also talk about that. Like so many other parts of married life, communicating often about your retirement plans is the key.