Being married is awesome!
While the first few years of marriage took a lot of communication and patience, there is no person I would rather spend time with than my wife. Some of the adjustment period for us was learning how to invest as a married couple.
Investing as a married couple has a few more options than a single person would need to explore, but once you get into it, you will be investing like a team.
Investment Options for Married Couples
For most people, there are two types of investment options you will need to consider.
Retirement accounts are only for individuals, but that does not mean they aren’t a significant part of investment strategy for married couples.
Ensuring that your retirement accounts are lined up and not overexposing you to risk, will make sure that you retire comfortably. In my family, we each have employer-sponsored accounts and individual retirement accounts.
Joint Investment Account
If you are already maxing out your retirement, you can open up a joint investing account with a brokerage. These accounts are readily available and only need your personal information to get started.
You only need to investigate the different brokerages and apps that make joint accounts available and easy to manage.
Best Investment Apps for Married Couples
There are tons of brokerage apps out that can help you manage your investments.
Personal Capital is a free app that will help you manage all your investing and banking accounts. You can get a full picture of how all your investing is going.
They will also help you with investing strategies and can be your investment advisor for a small fee. You can read our Personal Capital review to understand all the details of this top investment app.
Betterment allows you to invest without having to manage any of the investing. Instead, this robo-advisor will have you fill out a questionnaire whey you sign up, determine how much risk you are willing to take, and make all the adjustments for you.
Their model focuses on exchange-traded funds, so your money is very diversified. You can open up joint accounts or individual retirement accounts.
We cover all the details of this hands-off brokerage in our Betterment review.
M1 Finance is making it easier than ever for people with joint accounts to invest. Not only do they charge zero trading fees for stocks and ETFs, but M1 also allows you to buy fractional shares.
Fractional shares mean that you can buy a tiny portion of a share instead of having to purchase an entire share. These portions of a share are great for people who want to buy stock in large companies with high stock prices.
For example, Netflix is currently more than $400 per share of stock. Instead of having to invest $400 in that one share, you can buy $20 worth or Netflix stock or 5% of a share.
Our M1 Finance review covers more about fractional shares and how this excellent brokerage operates.
Regular taxable investment accounts do not have contribution limits. However, retirement accounts do.
While retirement accounts are only in one person’s name, the contribution limits are decided by the household income if you file as “married filing jointly”. If you file taxes separately, then the income limits are based on your individual income.
For most people, there are two sets of contribution limits, one for employer-sponsored plans and one for individual retirement accounts. Those with self-employed income have other retirement accounts available, which also have separate contribution limits.
The most common employer-sponsored plans are the 401(k) and 403(b). With either type of account, you can contribute a maximum of $19,500 per year.
For those 50 and older, you can make catch up contributions of $6,500 per year, for a total of $26,000. If your employer matches funds or contributes without matching, the total can reach up to $57,000 per year.
If your employer offers a Roth option for your retirement account, the contribution limits are the same, but your Roth contributions will begin to phase out at $196,000 and reduced to zero at $206,000.
If both of you have employers that offer a retirement account, these contributions are on a per-person basis.
Individual Retirement Accounts
Individual retirement accounts (IRAs) allow anyone to open a tax-advantaged account, whether your employer offers one or not. The contribution limits are $6,000 for each spouse. If you are 50 older, you can make an additional catch up contribution of $1,000, for a total of $7,000 a year per spouse.
All or some of your contributions can be made into a Roth IRA, and once again, the ability to contribute to a Roth account beings to phase out at $196,000.
Self-Employed Retirement Accounts
For those with self-employed income, the most common accounts are a SEP IRA or a Solo 401(k). The plans have the same contribution limit of $57,000 or 25% of what you pay yourself, whichever is lower.
Contribution limits for the self-employed and small business accounts are per employee, so if you have a business where you can pay your spouse, you can make this contribution level for each of you.
Investing Tips for Married Couples
There are many advantages to investing as a couple. Use these tips to make sure you are getting the most from your shared investments.
In all of our relationships, communication is key, but nowhere is that more important than in our marriage. Amy and I have a monthly budget meeting where we talk about our month to month finances.
We also discuss our investments every quarter. This is an excellent reminder to rebalance your portfolio so that no one investment is exposing you to too much risk.
Most of all, this tip is important because usually, one spouse deals with most of the investing, but if something happens to that spouse and the couple has not been talking about their investments, then the surviving spouse is left to grieve and sort everything out.
Clean Up Old Accounts
As a society, we do not stay with the same employer as long as we used to. The Bureau of Labor Statistics reports that the average number of jobs a person holds is now 12 in a lifetime.
What that means is that we also end up with several employer-sponsored accounts if we do not clean them up by consolidating them. This can be done by rolling your employer-sponsored plans into an IRA.
All brokerages are happy to help you make this happen, and it makes keeping track of all your accounts much more straightforward. In a perfect scenario, each you would have an account from your employer and then an account for your IRAs. Whenever you leave an employer, that money would roll into your IRA.
If you have recently gotten married, or never taken the time, you should update the beneficiaries on your accounts. In our family, my wife is the primary beneficiary and gets 100% left to her.
If both of us were to pass away at the same time, the account is then split evenly between our children as the secondary beneficiaries. If you have sizable investment and retirement accounts (more than $1 million), you will want to talk to a financial advisor about setting up a trust so that the assets can be protected.
Get Life Insurance
This may not seem like a part of your investing strategy, but life insurance is there to make sure that, should one of you pass away, the other spouse does not have to dip into their investments to make ends meet.
Getting enough life insurance will protect your investments and family.
Consult with a Professional
If you are ever confused or intimidated by investing, then you should sit down with a fee-only financial advisor. Fee-only advisors have a fiduciary responsibility to their clients and are not compensated for selling a particular investment(s).
Because fee-only advisors or only paid for advice, they have fewer conflicts of interest in their business.
Final Thoughts on Investing for Couples
The most significant advantage of being married is that you always have someone to bounce ideas off of. This is true for any major or minor life decisions.
Investing as a married couple comes with the advantage of counsel and knowledge of different industries.
In our family, I work in tech while my wife is a teacher. There are tons of businesses that I have never heard of that support education. My wife points out which companies are making it big in education helps us invest in companies I would have never heard of otherwise.
Working as a couple as we continue to learn how to invest and manage our finances, has made all the difference in our long term success.