IRA means Individual Retirement Account, and a non-working spouse can have one too. In 2014 the maximum contribution to what is called the “spousal IRA” is $5500 ($6500 if you are over 50) as long as the working spouse has enough earned income to cover the contributions of both. And this is in addition to any 401(k) or equivalent retirement plans.
If you are “non-working,” where is the money supposed to come from? There are a number of creative ways a husband and wife can do this as long as they work together.
Let’s say the working spouse each day has a Starbucks on the way to work and buys lunch at work. That could be $15 a day, $75 a week, $300 a month, $3600 a year. If you make coffee and a lunch for your working spouse, you are already over half way there in savings. You might be the one who does the grocery shopping. You could plan meals, shop with a list, cut down on sugary drinks and prepackaged foods and end up saving the family another $100 plus a month. Tighten up your teenager’s clothes budget; better yet, suggest that he or she get a job so they can buy fancier clothes.
OK, I save the money in the family budget, but it doesn’t put extra money in my pocket. I strongly believe every spouse, working or not, should have access to a certain amount of money each month that can be spent on whatever without the other spouse having to approve the purchase. Ask that this amount be doubled so you can start a retirement account. Better yet, ask for a “spousal salary” by which you receive money for the household budget and keep the profit if you spend less. If your spouse doesn’t want to pay you a salary, it may be time to talk about the role of each spouse again. Or you may wish to show your reluctant spouse the article, “How Much is a Housewife Worth?” (Answer: more than $125,000 a year.)
My grandmother worked on a farm; she controlled the “egg money” which was the money she earned on selling eggs after the family’s needs were met. Last year I did an article for the Gazette’s Fresh Ink after a tour of chicken coups in the city of Colorado Springs. Did you know you can own up to 10 birds (combination of chickens and ducks) in the city except no roosters over six months? Chickens probably are not going to work for everybody. The new “egg money” could be the money earned on eBay or in the consignment story by selling things the family no longer needs. And, believe me, there are untold thousands of dollars of “stuff” in everyone’s house that hasn’t been worn or used in years. Use your ingenuity to earn cash.
My goal here is to have everyone save for retirement. Starting at age 20 and going until age 60, $5500 a year for 40 years at 5% compounded interest is $607,000. I suggest a Roth IRA so none of this money will be taxed when withdrawn. And if the non-working spouse sets a good example for the working spouse, perhaps he or she will be motivated to put aside even more for retirement. A win for the whole family!