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Getting engaged to be married is a great milestone in many people’s lives. After the wedding planning is over, it’s time to start another set of plans: planning for retirement as a married couple.
Here are some things to consider when you get married:
How are you using your retirement accounts?
For married couples, employer‐sponsored retirement accounts, including IRAs and 401(k)s, can be orchestrated to work together.
In fact, even if one spouse is not working or has a job that does not have the benefit of a retirement account, they can often make spousal contributions to an account for themselves. This is a huge benefit for couples with only one employer‐sponsored retirement plan.
Are you protecting your property?
When you’re married, in most states across the United States, you can own your joint properties as “tenants by the entireties.” This means that you and your spouse legally have joint ownership, and neither party can break up the tenancy (i.e. sell the house) without the permission of the other party.
This type of agreement also protects the property in the event that one spouse is sued and also renders the property immune from claims of most creditors.
Do you need a prenuptial agreement?
For younger couples, a prenuptial agreement is rarely necessary simply because neither party has all that much to protect. But for second marriages, marriages with existing children or in the case that one party owns significant assets prior to getting married, it is important to consider creating a prenuptial agreement.
The estate planning and divorce planning considerations may not be what you want to think about when entering into a marriage, but they are a very big deal and will help you in the long run should the marriage end in divorce.
Retirement planning in the case of death or divorce.
As a married couple, your spouse is most often your beneficiary of your retirement accounts. In the event of your death, your spouse will inherit your IRAs and 401(k) as a spousal beneficiary. If this happens, your spouse can often consolidate your account with his or her own to make it one account.
If you read the previous article about navigating Social Security, you know that if one spouse dies, the surviving spouse is able to claim the higher Social Security benefit, whether his or her own or not. This remains an option even if the couple is divorced, as long as they were married for 10 years or more and did not remarry.
Planning for a marriage doesn’t end at the wedding planning. There are many considerations when you’re no longer planning your finances independently. Think about how you can plan for retirement together, how to protect all of your assets and how to navigate Social Security as a couple. Plus, don’t bankrupt yourself or go into debt when planning your wedding. Focus on the marriage, not the party, and save the money for things you truly need.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.