Planning for retirement for two is almost twice as complicated as planning for just one, and it gets especially complex when both spouses are working. Here's how to maximize your retirement savings -- and your returns -- for both yourself and your spouse.
Make it a joint effort
It's vitally important that both you and your spouse know exactly how much each of you is saving for retirement and how you're handling that money. It would be nice if such joint financial decision-making were a priority for everyone, but unfortunately, that's not the case. A NerdWallet survey found that one in five workers whose spouse was saving for retirement didn't know how much their spouse was saving, and 43% of married workers who were saving for retirement didn't consult with their spouse before making investment decisions in their retirement portfolios.
If you don't know how your spouse is making such basic retirement decisions, then you can't make a meaningful plan for yourself.
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Use a retirement savings account
That same NerdWallet survey also found that 31% of married workers used a bank savings account to save for retirement. A bank savings account is an extremely bad choice for retirement savings for several reasons. First, you're losing out on the tax benefits that a 401(k) or IRA would give you. Second, you're also losing out on the investment options offered by a retirement savings account. Bank savings accounts may pay interest, but that interest rate is so low that it won't even keep up with inflation; far from growing enough to fund your eventual retirement, that money will lose value. And third, because the money in a savings account is much more accessible than the money in a retirement account, you're far more likely to spend that money early and leave yourself nothing to retire on.
Save enough for two
Most workers should be saving at least 10% of their income for retirement; 15% would be preferable. For couples, that's 10% to 15% for each spouse. In a two-income household, it's not enough for just the primary breadwinner to save 10% of their income; either both spouses need to save a minimum of 10%, or the primary earner needs to save at least the equivalent of 10% of the entire household income.
Decide on single versus multiple accounts
Depending on your situation and preferences, funding one retirement account for both spouses may make more sense than having separate accounts. If one spouse has access to an excellent 401(k) and the other doesn't, then having the fortunate spouse make all the household's retirement contributions into the 401(k) may be the best approach. But if both spouses have 401(k) accounts with company matching, it makes sense to contribute at least enough to max out that free money in each account.