How Marital Status Can Impact Your Retirement Accounts

Here’s How Marital Status Can Impact Your Retirement Accounts


Written by John Rothans

Oct 14, 2020

You may have heard that tying the knot can lead to a longer life span, but did you know it can impact retirement, too? Learn more about the ways marriage can affect retirement planning, savings, benefits, and more.

1. Pension Plans

Most companies no longer offer defined-benefit pensions, reports USA Today, so you might consider yourself lucky if you have access to a pension plan.

A pension earned before you get married generally is not considered joint property following your marriage, according to the Pension Rights Center. However, any pension earned during a marriage is typically regarded as joint property.

You and your spouse generally have two options when it comes time to take advantage of pension benefits. Check with the pension plan administrator. According to the retirement-focused website Next Avenue, you can either take monthly payments based only on the account-holder’s expected lifetime, or you can take monthly payments based on both people’s lifetimes. If you go with the first option, monthly benefits are higher but benefits stop when the account holder dies. In the latter, if the account holder dies before their spouse, the surviving spouse continues to receive benefits. However, the monthly benefits are lower throughout the course of the plan.

If a pension is divided between divorcing spouses, this typically must be done when other joint assets are being split during the divorce, the Pension Rights Center explains.

2. Social Security

In and of itself, marriage doesn’t affect your Social Security retirement benefits. However, getting remarried does affect those benefits.

AARP explains that most widows and widowers become eligible for survivor benefits on a late spouse’s work record when they turn 60 (50 if the survivor is disabled). But they give up those benefits if they remarry before reaching that age. If you remarry after age 60 (50 if you’re disabled), you regain eligibility for the survivor benefits, AARP notes.

According to AARP, the same holds true if you are divorced and collecting survivor benefits on the work record of a deceased ex-spouse. However, if you are divorced and receiving spousal benefits on the work record of an ex-spouse who’s alive, those payments stop if you remarry (at any age). You can collect those payments only if you are single or become single again, AARP explains.

“Married individuals have Social Security claiming options that single people don’t, and they can use various strategies to maximize their benefits as a couple. Spouses are eligible to receive Social Security payments worth as much as 50 percent of the retired worker’s benefit (if it’s more than they would get based on their own work record), and surviving spouses are entitled to up to 100 percent of the higher earner’s benefit,” according to U.S. News & World Report.

A divorced spouse can get survivor’s benefits if the marriage lasted at least 10 years. By contrast, single or divorced people whose marriage didn’t last 10 years can claim benefits based only on their own work record, U.S. News & World Report notes.

3. 401(k)s

One spouse usually can’t pull funds from the other spouse’s 401(k), even if the spouse who doesn’t control the account is listed as a beneficiary, unless they have permission from the account holder, according to Zacks.com. However, if a couple divorces, one spouse might be able to claim money from the other spouse’s 401(k).

If you opened your employer-sponsored 401(k) after you and your spouse got married, the account might qualify as joint property, Zacks.com notes. That might be the case even if you opened your account before tying the knot but accumulated funds in the 401(k) during the marriage.

4. IRAs

When you get married, you cannot share your IRA with your spouse. Those accounts must be kept separate. “By law, as the name implies, IRAs must be associated with just one person,” Zacks Investment Research notes.

While you can’t share your IRA, you can contribute to a Roth or traditional IRA for a non-working or lower-earning spouse to help increase tax-advantaged retirement savings for the whole family, MarketWatch explains. As long as the working spouse has enough income to contribute to both accounts, it’s possible to full contributions to each. Just double check with your financial advisor since being married can affect income and tax deduction limits for IRAs.

In a divorce, an IRA can be divided on a tax-free basis between spouses as part of a divorce decree or property settlement as long as the funds are transferred directly from one spouse’s IRA to the other spouse’s IRA.

Of course, if one spouse wants to open an IRA, including a Precious Metals IRA, it’s best that both spouses participate in the decision. This way, both spouses are empowered to work together on achieving their retirement goals.

“When you’re married…and approaching retirement, planning your golden years is a dual effort…. Setting expectations early on and planning for changes ahead of time can help couples design their ideal retirement,” U.S. News & World Report advises.

Two heads can be better than one—that goes for retirement planning, too. Reach out to a knowledgeable IRA Account Executive at U.S. Money Reserve today for a free IRA consultation.


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