Author Topic: Factoring in spouses' ages when allocating between investment accounts  (Read 2637 times)

Nick_Miller

  • Pencil Stache
  • ****
  • Posts: 933
I'm 42 and my wife is 37.

If I understand correctly, I can withdraw from Roth, 401k, etc, when I reach 59.5 without penalty (I know there are ways to access earlier), but that only applies to the accounts in my name?

So when I turn 59.5, I can make withdrawals from "our" retirement accounts that list me as the owner but not from anything that lists her as the owner? Is there a way to have a retirement account jointly held whereas the entire amount would be accessible once either of us turned 59.5?

I keep wondering if it makes more sense to prioritize my IRA each year, since we could access those earnings many years earlier than we could access my wife's accounts, again, using the "general rules."

And yes we plan to max out both IRAs each year anyway, but I was just thinking, if during a certain year we only have the funds to max one, how do our ages factor in to making that decision?

braje

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #1 on: August 29, 2016, 02:32:23 PM »
Contributions to Roth can be taken out at anytime.

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 4732
  • Age: 34
  • Location: Seattle, WA
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #2 on: August 29, 2016, 03:12:14 PM »
Retirement accounts are individual. There's no way to make a joint IRA or 401(k) account. You're right that this means your accounts will have easier access a few years earlier than hers. You'll also start RMDs sooner.

sisto

  • Pencil Stache
  • ****
  • Posts: 948
  • Age: 50
  • Location: Sacramento, CA
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #3 on: August 29, 2016, 04:22:27 PM »
You are also correct that you will want to prioritize your IRA over hers if you can't put the max in both.

Nick_Miller

  • Pencil Stache
  • ****
  • Posts: 933
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #4 on: August 30, 2016, 06:51:52 AM »
I appreciate the confirmation!

My concern is that she is the only one who has access to a 401k, so our investment accounts will be weighted towards "hers" accounts. (we each have IRAs).

But yes I know we can go the SEPP route to gain access to some of the 401k money.

mskyle

  • Pencil Stache
  • ****
  • Posts: 693
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #5 on: August 30, 2016, 10:34:05 AM »
I appreciate the confirmation!

My concern is that she is the only one who has access to a 401k, so our investment accounts will be weighted towards "hers" accounts. (we each have IRAs).

But yes I know we can go the SEPP route to gain access to some of the 401k money.


You also have the Roth conversion pipeline option, as explained here: http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

sisto

  • Pencil Stache
  • ****
  • Posts: 948
  • Age: 50
  • Location: Sacramento, CA
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #6 on: August 30, 2016, 10:47:15 AM »
I appreciate the confirmation!

My concern is that she is the only one who has access to a 401k, so our investment accounts will be weighted towards "hers" accounts. (we each have IRAs).

But yes I know we can go the SEPP route to gain access to some of the 401k money.
I am in a similar boat, my wife is almost 6 years older than I am. I am the one with the income as she was a SAHM for our 2 boys. She has earned enough credits for social security, but has no 401K. Because I have a work place 401K and she doesn't she qualifies for a partial tax credit for tIRA so we max that first, of course after maxing 401K, HSA, ESPP, and a small limited use FSA. We also plan on doing 72t SEPP when the time comes as well as tap into taxable accounts to bridge the gap. You will also need to figure out your social security claiming strategy to help maximize your income in retirement. You may want to consider writing a formal case study on this. There are some really great experts here that can probably really help you with a strategy with a full case study.

Nick_Miller

  • Pencil Stache
  • ****
  • Posts: 933
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #7 on: August 30, 2016, 12:11:32 PM »
I appreciate the confirmation!

My concern is that she is the only one who has access to a 401k, so our investment accounts will be weighted towards "hers" accounts. (we each have IRAs).

But yes I know we can go the SEPP route to gain access to some of the 401k money.
I am in a similar boat, my wife is almost 6 years older than I am. I am the one with the income as she was a SAHM for our 2 boys. She has earned enough credits for social security, but has no 401K. Because I have a work place 401K and she doesn't she qualifies for a partial tax credit for tIRA so we max that first, of course after maxing 401K, HSA, ESPP, and a small limited use FSA. We also plan on doing 72t SEPP when the time comes as well as tap into taxable accounts to bridge the gap. You will also need to figure out your social security claiming strategy to help maximize your income in retirement. You may want to consider writing a formal case study on this. There are some really great experts here that can probably really help you with a strategy with a full case study.

I might just do that.

I posted a case study when I joined a few months ago, but it was more targeted to our current budget, saving more money, paying down debt, etc. That "got the ball rolling." We're aggressively paying off debts and aiming to max out IRAs. But that's the easy stuff. Creating a realistic retirement plan is a lot more complicated, especially given our age difference.

I think I'll soon post my basic "retirement plan" here or in AaM. Basically I project that in 2026 (ages 52 and 47), we'll have a paid-off home, no debt, and roughly $400K in retirement accounts. That assumes we max IRAs yearly, keep our 401k contributions as they are, and that everything gains 6% per year.

The question is, what then? We'll be somewhat FI, but obviously not in FIRE territory.  For me, age 52-62 is the great unknown at this point.


CheapskateWife

  • Handlebar Stache
  • *****
  • Posts: 1392
  • Location: Central TX...but getting ready to hit the road
  • Countdown to fire in 3-2-1
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #8 on: August 30, 2016, 12:19:48 PM »
I appreciate the confirmation!

My concern is that she is the only one who has access to a 401k, so our investment accounts will be weighted towards "hers" accounts. (we each have IRAs).

But yes I know we can go the SEPP route to gain access to some of the 401k money.
I am in a similar boat, my wife is almost 6 years older than I am. I am the one with the income as she was a SAHM for our 2 boys. She has earned enough credits for social security, but has no 401K. Because I have a work place 401K and she doesn't she qualifies for a partial tax credit for tIRA so we max that first, of course after maxing 401K, HSA, ESPP, and a small limited use FSA. We also plan on doing 72t SEPP when the time comes as well as tap into taxable accounts to bridge the gap. You will also need to figure out your social security claiming strategy to help maximize your income in retirement. You may want to consider writing a formal case study on this. There are some really great experts here that can probably really help you with a strategy with a full case study.

I might just do that.

I posted a case study when I joined a few months ago, but it was more targeted to our current budget, saving more money, paying down debt, etc. That "got the ball rolling." We're aggressively paying off debts and aiming to max out IRAs. But that's the easy stuff. Creating a realistic retirement plan is a lot more complicated, especially given our age difference.

I think I'll soon post my basic "retirement plan" here or in AaM. Basically I project that in 2026 (ages 52 and 47), we'll have a paid-off home, no debt, and roughly $400K in retirement accounts. That assumes we max IRAs yearly, keep our 401k contributions as they are, and that everything gains 6% per year.

The question is, what then? We'll be somewhat FI, but obviously not in FIRE territory.  For me, age 52-62 is the great unknown at this point.

My DH and I have a 7 yr difference, and we have worked out an annual strategy for what to start drawing down when, rolling over portions of 401k into tIRA's to start the Roth Pipeline.  Its dizzying without a map!  Here's ours...feel free to use it to craft your own!


hollyluja

  • 5 O'Clock Shadow
  • *
  • Posts: 57
  • Age: 36
  • Location: Portland, OR
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #9 on: September 01, 2016, 12:03:14 PM »
My DH and I have a 7 yr difference, and we have worked out an annual strategy for what to start drawing down when, rolling over portions of 401k into tIRA's to start the Roth Pipeline.  Its dizzying without a map!  Here's ours...feel free to use it to craft your own!

that is very helpful- thanks!  My husband is a lot older than me and I'm trying to swing it so we both retire together.  I've been using Personal Capital's retirement planner which is great for timeline events, but doesn't allow this level of granularity.

 I'm in a situation also where I've been saving for longer than him, so when he hits retirement age most of the $$ will still be in my accounts.  It's an extra level of complication for sure!

ETA: If you feel comfortable answering, why does your cash balance not go up when you sell your house? 
« Last Edit: September 01, 2016, 12:05:11 PM by hollyluja »

CheapskateWife

  • Handlebar Stache
  • *****
  • Posts: 1392
  • Location: Central TX...but getting ready to hit the road
  • Countdown to fire in 3-2-1
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #10 on: September 02, 2016, 10:07:45 AM »
My DH and I have a 7 yr difference, and we have worked out an annual strategy for what to start drawing down when, rolling over portions of 401k into tIRA's to start the Roth Pipeline.  Its dizzying without a map!  Here's ours...feel free to use it to craft your own!

that is very helpful- thanks!  My husband is a lot older than me and I'm trying to swing it so we both retire together.  I've been using Personal Capital's retirement planner which is great for timeline events, but doesn't allow this level of granularity.

 I'm in a situation also where I've been saving for longer than him, so when he hits retirement age most of the $$ will still be in my accounts.  It's an extra level of complication for sure!

ETA: If you feel comfortable answering, why does your cash balance not go up when you sell your house?

Negative appreciation in value over the ownership period, anticipated realtor and closing costs, and some property specific conditions and repairs that make us feel like we need to plan for that to be a zero sum game.  Our market is incredibly stagnant both when considering wages and real estate, and being a nice house in a military town means there aren't too many high ranking folks who would be able/willing to afford our place.  The sale will take time based on recent activity in our neighborhood.  If we do end up making some lettuce on the sale, then its a happy surprise!

In my model, you will see numbers in red, which indicate a value that can't be touched until the proper age is reached by the owner of the account.  It ends up making it look like we are raiding all his accounts first :)  Because we are. 

dougules

  • Handlebar Stache
  • *****
  • Posts: 1514
  • Location: AL
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #11 on: September 02, 2016, 11:06:04 AM »
The way I see it, it doesn't matter once you have enough in your personal accounts to survive that 5 years under worst case market conditions. 

Waterbug

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Factoring in spouses' ages when allocating between investment accounts
« Reply #12 on: September 02, 2016, 11:37:18 AM »
My DH and I have a 7 yr difference, and we have worked out an annual strategy for what to start drawing down when, rolling over portions of 401k into tIRA's to start the Roth Pipeline.  Its dizzying without a map!  Here's ours...feel free to use it to craft your own!

that is very helpful- thanks!  My husband is a lot older than me and I'm trying to swing it so we both retire together.  I've been using Personal Capital's retirement planner which is great for timeline events, but doesn't allow this level of granularity.

 I'm in a situation also where I've been saving for longer than him, so when he hits retirement age most of the $$ will still be in my accounts.  It's an extra level of complication for sure.

Same here! I'm 10 years younger and have a higher balance in my 401k because he cashed his out at one point (before we met).  We are currently trying to get to the point where we can max out both 401ks but not there yet. We did just bump up our contributions and for now we are contributing the same dollar amount. I haven't looked at Personal Capital but will check it out along with the spreadsheet posted above. I would eventually like to do a case study but still 'cleaning house' as I learn more.

Interested in reading the rest of the replies on this topic!