The New Commonsense Guide to Your 401(k): Rebuilding Your Portfolio From The Bottom up

Chapter 35. Coordinating with Your Spouse

WE FREQUENTLY HEAR that money issues drive more couples apart than anything else besides sex. So now that you have a retirement plan, experts suggest that you coordinate your investment choices with those of your spouse so that you can make the most out of your 401(k) plans. Yikes! Deciding how to manage retirement benefits and allocate both dollars and investment options between spouses is a complex issue—one that could keep a team of psychologists busy.

But it is important for couples to face this issue. Legally, a pension—which includes 401(k) plans—belongs only to the participant in the plan. There are some loaded issues here. Coordinating your benefits makes some assumption about the longevity of your relationship. Each spouse must feel that he or she is getting a fair shake in retirement dollars. That means putting aside money in each spouse's name even though it may not be possible to put the same amount aside for each spouse because of different types of retirement plans and different levels of compensation.

While you should aim for equity in the retirement dollars you put aside for each spouse, you should also try to squeeze the most you can from the two plans. Although couples seem to be increasingly adept at making the most of their health insurance plans by picking the best from each spouse's coverage, I'm not sure the same strategy has been applied to 401(k) plans.

Here are some issues to consider:

• Matching. If you cannot afford ...