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Retirement planning strategies for dual-income families

Are you making the most of two incomes in your retirement planning? Review these 3 income scenarios and strategies for each.

Tags: Investing, Planning, Retirement
Published: February 13, 2019

Do you and your partner both have careers? Do you run a business together? Is one person working full-time and the other part-time? Accounting for how your family makes money can help you to plan your retirement and build your family’s savings.

The most important step you can take is discussing your future together. After that, it’s all in your income details and how you tailor your mix of retirement accounts to your particular situation.

Here are three different scenarios and planning options for each.


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The two-salary family
Both you and your partner are full-time, salaried employees with access to employer-sponsored retirement plans. For this type of family income, considering your age is essential.
Save and invest according to your age
When you have more income, you have a greater chance of benefiting from equity growth over your working life. If you’re young, consider keeping your retirement accounts allocated to higher-risk investments, like growth stocks. As you get closer to retirement, consider reallocating your retirement savings to lower-risk investments, like bonds.
Max out your retirement accounts
Consider contributing the yearly maximum to your 401k/403b/457 — the limit in 2020 is $19,500, if you’re under age 50. If you’re over age 50, you can add an extra $6,500 in 2020.
Don’t overspend
If you can, consider living off one salary and saving the other.
Plan to defer Social Security payments
Don’t claim your Social Security benefits until age 70, if you can get by on your savings and/or distributions from your retirement accounts. If you claim at your full retirement age, which varies based on the year you were born, you receive 100% of your benefits. However, if you wait and claim at age 70, you could receive 132%.1
The self-employed family
A self-employed or solo 401(k) works well if you don’t have employees for your business, as you can make tax-deductible contributions.
A traditional or Roth IRA will allow you to save $6,000 toward retirement ($7,000 if you are age 50 or older). Contributions to Roth IRAs are post-tax, while traditional IRAs are pre-tax, so a tax specialist can help you decide what works best depending on your self-employed business income.
A self-employed or SEP IRA allows you to contribute up to $57,000 or 25% of your income in 2020, whichever is less, toward retirement. In 2020, only income up to $285,000 is taken into account for determining SEP contributions.
Keep saving
Without automatic paycheck deductions, it can be easy to let contributions slip. Consider setting up automatic transfers into your retirement accounts to stay on track.
The one full-time salary and one part-time salary family
One partner earns a salary, and the other works part time.
Take fewer investment risks
Especially if the full-time salary earner in the relationship is contributing the majority of the couple’s retirement savings, lower-risk investments may help safeguard against market volatility.
Consider (and possibly avoid) required minimum distributions (RMDs)
Unlike traditional IRAs, Roth IRAs have no RMDs (some other retirement accounts have RMDs at age 72). Any funds in these accounts could potentially stay put even after you retire, increasing the time horizon for them to give your family’s savings a few extra years to grow.
Keep your family’s finances safe in an emergency
Make sure the partner who is working part time is the beneficiary on any retirement accounts that the full-time salary earner is paying into. If the partner who works part time makes so little that the partner with a salary is close to the sole breadwinner, consider long-term disability or term life insurance to help if the partner with a salary can’t continue working.
[1] “Benefits Planner: Retirement,” Social Security Administration, retrieved November 2018.


What’s your family’s retirement strategy? Learn more about your options when saving for retirement.