First Time Husband and Wife Investors - Roth IRA Strategies?

First time investors here!

My husband is 27 years old and has a 401K through his employer. This was started May 2022. He is contributing 4% before tax of his $85,000 salary for the company match. The 401k is invested in the Fidelity Freedom Index 2060 Fund.

I currently work part time, earn $30,000, and I’m 31 years old. My employer does not offer any retirement account options. Our goal is to increase my husband’s income to the point where I don’t need to work anymore. However, this won’t be for several years now.

We’re looking into opening two Roth IRA’s through Vanguard. We have $6,000 saved up to open 2 Vanguard Roth IRA accounts. We can then contribute $750 monthly to these two accounts, so, $500 into one account and $250 into the other account. If we decide to use Target Date Index Funds, my husband’s would be 2060 and mine would be 2056.

Because I’m currently gainfully employed, would my Roth IRA not be considered a spousal Roth IRA account? What happens when I stop working? Can I still contribute to my Roth IRA I opened when I was working? Also, is this order of investing optimum for a husband and wife team?:

401K up to the match
My Roth IRA $6,000 per year contributed
Husband’s Roth IRA $3,000 per year contributed
Then later on when we increase income, contribute up to the max for my husband’s 401K, and after that open a taxable brokerage
Is there anything I should look into or do differently?

I appreciate your insight immensely! Happy investing! We’re so excited to start!

Hi @laurennicole!

Thank you for the excellent questions! Here are my thoughts on your two questions:

  1. You can still contribute to the same Roth IRA even after you stop working. A spousal Roth IRA is not a separate and distinct account. It’s a rule that allows for spouses that don’t have earned income to still be able to put money in a Roth/Traditional IRA (assuming they file married filing jointly for their tax return and they aren’t above any income limits). It sounds like a great plan what you laid out.

  2. Yes, I like the order of operations. That very much is in line with PFC’s checklist. (I’m assuming you don’t have any high interest debt - otherwise that should be prioritized after the 401k match).

I hope this helps. Always feel free to let us know if you have any questions either here or on our FB group! Personal Finance Club | Facebook