Are Your Family's Retirement Plans Fighting Each Other?

How many retirement accounts do you and your spouse have? Do you both have Roth IRAs and 401k retirement plans at work? You may find out after closer inspection that your separate plans do not mesh well with each other. In fact, you may find yourself poorly diversified with a lot of fund overlap if you are not too careful.

You may want to add several checks to your annual investing portfolio rebalancing this year to synchronize your entire family?s retirement plans. Here are some things to consider.

Look At Your Family As A Whole

One of the best ways to synchronize your entire family?s retirement planning is to look at the family as a whole unit instead of multiple accounts owned by two people. Your spouse?s retirement accounts and his or her asset allocations need to dovetail into yours as well. There is a risk of overlapping investments between a husband and wife?s retirement accounts.

For example, many 401k retirement plans promote index funds as their fundamental investment choice. Are you and your spouse investing in the same types of assets without even realizing it? You have the very good potential for both people to be over weighted in an index fund or ETF that invests in a broad market index such as the S&P 500.

Inspect Your Investments And Allocations

There are several ways that you can ensure that your asset allocations as a family provide you with diversification across several asset classes. You can each set up separate asset allocations between, stocks and bonds, as well as both choosing like large and small cap funds,

Are You Capitalizing On Retirement Plans?

A spousal IRA and Roth IRA are another retirement plans that you want to ensure that you are using as much as possible. Even if your spouse does not earn an income, you both can invest in separate Roth IRA accounts assuming that at least one of you has an earned income and meets the contribution limits.

A Roth IRA is such a valuable tool that allows families to reduce the amount of taxes they pay in retirement, and taking advantage of investing $10,000 as a family even if your spouse is not currently working can have a dramatic affect on your retirement nest egg. It can often be worth the effort of one spouse funding both in a family effort to maximize retirement benefits. Families should also strive to ensure that they capture any employer matching 401k contribution if available to one member of the family and not miss out on free money for retirement.

View Your Plans Together

One way to monitor your family?s eclectic collection of retirement funds is view them all in the same place. Services like the ones offered by Mint.com, banks, and other financial websites that allow you to view several accounts from many different sources provide families with a single place to review and focus their attention. It is very easy to see which accounts may be doing well or which ones need more of your family?s focus when they are all displayed on one website. Websites like Mint are great places not only to track your spending habits but to easily see all of your family?s retirement accounts in one place. Mint.com ? FREE Money Management Software!

A family should approach retirement thinking like one entity instead of a collection of accounts owned by two separate people. A husband and wife?s retirement accounts can interweave and support each other providing increased diversification when approached as one.

About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master?s Degree in Finance and is currently pursuing his Certified Financial Planner credentials. Email him directly at Hank[at]MoneyQandA.com.

Hank Coleman has written 269 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

Subscribe To Money Q&A

If you want to learn more about taking back control of your money please subscribe to Money Q&A?s RSS feed or via email to receive all the latest articles! You can also subscribe to our Free Weekly Newsletter.

ruben studdard black friday sales 2011 black friday sales 2011 whitney duncan bradley cooper roger craig roger craig