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How to Save for Retirement as Newlyweds


As young newlyweds, you might think that retirement is so far away that it is not worth worrying about. You would rather focus on love and romance. Besides, you have enough bills to pay on your meager post-financial crisis salaries anyway. Why worry about that far into the future? If this sounds at all familiar to you, you should reconsider.

When you marry, you do so with the intent that the two of you will be healthy and grow old together. The problem is that you can't grow old together comfortably without finances. You won't have any money if you don't plan for the future now. Don't you want to be able to retire, see the world, or at least just rest poolside in your golden years? That should be enough of a motivator to think beyond today.

Retirement is only one type of savings that requires your attention even if you feel too young to think long term. "There are three major reasons/purposes for long term savings, down payment on a house, kids’ education, and retirement," says Jerome Golden, president of Golden Retirement Advisors in New York. "It’s critical to have a plan for each, whether it should all be from personal savings, and/or help from parents, loans, etc."

For the purposes of this article, focus on retirement savings. But realize that much of this advice could be applied to those other investments, which require big money. To start you might discuss and decide how you'd like to spend your retirement, so you can come up with the amount of money you'll need to be able to survive and afford whatever luxuries you'd like. Then, work backwards. Calculate how much you'll need to make it happen and how long you'll have to work to do it. Figure out how much you can reasonably sock away on a weekly, monthly, and annual basis to make your dreams a reality.It's similar to the process for creating a family budget. You can get lots more specific information from the About.com Guide to Retirement Planning, who offers advice directly to couples.

One of the best ways to begin saving what you need is to take full advantage of any employer-sponsored plans at work by maxing out personal contributions to any employer contributions, says Golden. What's nice about doing this is that you'll never even have the chance to spend this money. It will go directly to retirement savings. In fact, Golden suggests folks begin doing this from their very first paycheck to ensure you get as much out of this system as you can.

Sometimes, it is hard to know if you'll actually have enough when it comes time to retire. What's important, says Golden, is starting to save. "With regular contributions during their early years of marriage, once college expenses are paid, they may need to increase those contributions during the home stretch to retirement," he adds. That's all right. As long as you have saved a little every year, you should be in a good position in those later years that it won't be such a burden to put away a little extra now and then.

Don't feel as though you have to save every single penny and live like you are poverty stricken as newlyweds. "As regards investing, newlyweds may think that small contributions won’t make a difference, but they will," reminds Golden. "Also, they may be afraid of investing, so low cost, diversified investments is what they need." In other words, consider mutual funds as opposed to playing the stock market willy nilly, for example.

Those newlyweds who work for themselves or have an employer who doesn't offer a 401(k) plan need to come up with their own system for savings. Golden recommends finding low-cost, tax-efficient ways to save. Traditional and Roth IRAs are options you might consider.

However you are saving for retirement - through an employer, on your own, or both - you should think about your finances in total and not just this one thing for which you are saving. "Newlyweds should manage their budget and lifestyle with their net pay, after payroll tax and regular 401(k) contribution," says Golden. "So, live on perhaps 90 percent of their take-home pay, and put the other 10 percent into personal retirement savings."

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