Jan 15, 2009
The Daily Poverty Party.
You are looking at a photograph Bossy took on Wednesday of her accountant. OK, maybe it’s Brian Dennehy, but the point is: Bossy’s accountant reminded her of Brian Dennehy.
The other point: oh yeah, the whole finance thing.
Bossy wants you to know she loved her accountant, and she loved being at an appointment with her accountant, and she loved working with her accountant to solve accountanty things.
Over the next several days, Bossy wants to talk about a few of the points brought up during her appointment beginning with this:
Bossy and her husband found out that Bossy needs her own retirement fund. Up until their appointment, Bossy and her husband were working under the misconception that the retirement fund Bossy’s husband recently set up can be for both of them.
No, says the accountant/financial advisor. Bossy can be named as a beneficiary on her husband’s retirement fund, but make no mistake: it is his retirement fund.
This is because Bossy’s husband has an IRA, which means, ah-ha! Individual Retirement Account. The thing about IRAs is they are built around individual specifics, such as income and age. Bossy’s income and age are not the same as her husband’s, and she would benefit from a different IRA structure.
In the case of a 401K, this is delivered through the employer — and so once again this is clearly individual. You can name your spouse as a beneficiary on your 401K, but strictly speaking this is not a joint retirement fund. The only thing joint about a 401K is the agreement you have between you and your spouse, and there are laws in place to protect this agreement.
But: if you are bringing in even a modicum of income, it behooves you to activate your own retirement fund — and can you believe all this financial talk has reduced Bossy to using words such as modicum and behoove?
And if one spouse has no income, the other spouse can purchase them an IRA, which has financial benefits over “sharing” a retirement fund because you are not paying taxes on this money, and because often individual IRAs and 401Ks have built-in limits that prevent couples from putting away the amount of money they are able to sock aside.
Not that Bossy would know a thing about having more money than limits allow.
If you have a very limited amount of money to put aside and a spouse’s employer matches their 401K, it probably makes sense to stick with this scenario since it doubles your kitty — but this needs to be reevaluated as employment situations change and/or more money becomes available.
Certainly the first order of business is to check into your retirement scenario and find out how you and your mate have things structured.
Go forth and investigate!
Whew! That WAS a mouthful. Very interesting, though. Do you suppose the individual retirement systmes should be equally funded? If so – I am s c r e w e d.
you lost me at modicum. i need some imodium now. it would behoove me to have a modicum of imodium.
At first, I thought your financial advisor was Merv Griffin but I think he’s dead!
Oh my shit. That was so…hard. Can you just have Merv tell me what to do? I am married to a teacher and make diddly as a stay-at-home daycare provider.
GO!
Maybe you could have Merv (sorry I keep typing that and thinking perv…can’t help myself) give his services as a giveaway for those of us following the TDPP. Just a thought.
My dad tried to open up an IRA for me … but I don’t pay taxes (shhh) so I don’t technically have any sort of income. Geez, being a hippie and staying off the government radar is hard sometimes!
Bossy’s husband needs to open up her IRA ASAP so that when she becomes Oprah’s BFF he cam just sit back and enjoy the greenroom.
My husband buys my IRA’s every year. It’s the least he can do for all the clean underpants and food I throw at him. And his 3 kids I shot out of my vagina.
This has been one of the hardest parts of my being laid off. I was just starting to see my retirement account growing and was able to put money into an account for our son. Now, I guess I need to live forever and hope my son is the next Bill Gates.
Sounds like you found an advisor who actually knows how to ADVISE. The few I have visited mumbo jumboed me so badly that I just left and have done next to nothing money wise. Anyway I do have a frivolous poverty post if anyone is interested……
http://blackbeardswyfe.blogspot.com/
This is interesting, I always thought of retirment accounts as mutual property. I guess that’s not really the case.
Yeah, we learned all about that a bunch of years ago. No matter how good your intentions and how well you play together in the sandbox, you gotta have your own retirement savings account. Start small; you can do it Bossy!
Was it hard to concentrate on what the accountant was saying, with his beady little dot eyes and all?
I lurf your use of modicum and behoove, btw.
this gave me a headache in the back of my brain. i guess, less of a headache and more of a stabbing pain. is that because i don’t have one of these set up? or because an anyeurism just done burst?
I need a hug from Poohie.
I’m scared.
Remember reading that a ROTH is a better way to go.
My husband’s 401K competes with mine and mine is currently winning! It’s a game! Yay! Your financial advisor would scold me anyway because I can’t stop spending money.
My case in point:
http://www.bitterkat.com/bk/2009/01/20-years-of-loving.php
Once a financial advisor told me that he could turn my tiny little amount of money into 2 million dollars in 30 years. This meant treating my tiny little amount of money differently than my husband’s. I will tell you how that works in 26 more years.
Dear Bossy, I now have a headache on your behalf. My solution to retirement? I’m just going to WORK FOREVER. That sounds easier than figuring out how to set up a plan.
By the way, once you’re all done with the work involved with discussing one’s finances, swing by the blog for instructions on how to play The Greatest Party Game In The World. And no, that’s not an exaggeration.
bossy, you would be so proud of me. i started my new job in december and immediately signed away 5% of my income to my 401K and they match it penny for penny. I should get a raise after 90 days and i think it’s all going to go into the 401k.
so, this is what being grown up feels like? now if only i could start getting my house in order
But what if you have no money to put aside because you are a public school teacher and your husband was employed with the American auto industry until it recently imploded?
What then?
Can Poohie come visit us?
Stephanie (#20), don’t teachers in your state have a retirement or pension fund?
And Bossy, absolutely you should sock away whatever eentsy amount you can, like you’re a little squirrel filling her cheeks for winter. You never know whether John Cusack will be able to carry the both of you through your retirement years.