You need your own retirement plan. This is true regardless of whether your spouse is covered at work or how much money, if any, you earn. Fortunately, even if you have little or no income of your own, you might still be able to open a spousal individual retirement arrangement, or spousal IRA, based on yours and your spouse's total earned income.

How spousal IRAs work
A common misperception about spousal IRAs is that they are somehow connected to your spouse. Other than the fact that your allowable contribution is based on yours and your spouse's total earned income, a spousal IRA is just like any other IRA: It's yours. It's in your name and your name alone. There is no such thing as an IRA owned by two people.

If you already own an IRA account at a brokerage or other financial institution, you can use it as your spousal IRA. You don't need to open a special "spousal" IRA, and you certainly don't need your spouse to open the account for you. If you earn income in future years, you can continue to contribute to the same account.

Your contributions to a traditional or Roth IRA are limited to the lesser of:

  • $5,500, or $6,500 if you are age 50 or older at the end of the tax year.
  • Yours and your spouse's total compensation that is included in gross income, less your spouse's deductible and nondeductible IRA contributions and Roth IRA contributions.

To qualify for a spousal IRA, you must be married to your husband or wife at the end of the tax year, and you must file a joint return. Your contributions to traditional and Roth IRAs are also subject to the same rules as non-spousal IRAs. Your contributions may be limited if you are a high-income taxpayer. If you use tax software, the program should calculate your maximum spousal IRA contribution.

You have until the original filing deadline, before any extensions, to open an IRA and make a contribution for the prior tax year.

Here are three great reasons why you might want to consider a spousal IRA.

1. Max out those contribution limits
One reason to have your own account and not rely solely on your spouse's plan is that the contribution limits for IRAs, and many other plans, are not terribly high. Consistency is the first key to retirement planning success. To make real progress on retirement savings, try to make the maximum contributions to both your accounts, and make them every year.

2. You can take advantage of your biggest asset: time
The second key to successful retirement planning is timing. It's the miracle of compounded earnings. Having your own IRA helps start your saving for retirement as soon as possible -- and getting started can be the hardest part. If you wait until you go back to work to start your account -- say, when the kids are older -- you'll miss out on prime saving years. It's a lot harder to create a fund that will sustain you in your retirement years if you wait too long to get started.

3. Take ownership in your retirement
The third reason you should have an account in your name is that it gives you a feeling of ownership and involvement. Most marriages have one partner more interested in money management and investing than the other. That's fine. However, you should both know what's going on and where your money is invested. Bonus: You're more likely to agree on financial goals and understand how you're working together toward them when both spouses feel like active partners.