Retirement Savings for Spouses

Saving for retirement can get complicated for spouses of service members who move frequently. But even if you switch jobs with each move, do freelance work on the side or take time off from working, there are still tax-advantaged retirement savings plans available to you.

Here are four ways you can save for retirement:

1. Take advantage of employer retirement plans. If you work for an employer that offers a 401(k), 403(b), 457 or other retirement-savings plan, you can contribute up to the annual limit even if your spouse contributes the maximum to the Thrift Savings Plan (TSP). These retirement-savings plans may lower your taxable income now and grow tax-deferred for retirement. Also, your employer might offer to match a percentage of your 401(k) contributions or eligible student loan payments, which can add to your retirement savings.

If you have the option of a Roth 401(k), 403(b) or 457 plan through work, consider contributing some money to that too—as long as the total contributions to the traditional and Roth plans don't top the annual limit (plus any catch-up contributions if 50 or older). These contributions are made on a post-tax basis, and you’ll be able to withdraw Roth earnings tax-free in retirement.

In the past, frequent moves might have kept you from staying at a job long enough to become eligible for retirement plans or vest in employer contributions. As of 2024, the government offers a tax credit to small employers who provide immediate eligibility for military spouses to contribute to and vest in retirement plans, so make sure you ask your employer about your options.  

2. Contribute to a traditional or Roth IRA. You can contribute to an IRA even if you, or your spouse, are already contributing the maximum to a 401(k), 403(b), 457, TSP or other retirement-savings plan. And it can be a great way to save even if you're moving around, have to switch jobs frequently or aren’t working. If you don't have earned income for the year, your working spouse can contribute to a Roth IRA on your behalf.

It's easy to keep investing in a Roth IRA even if you make frequent moves—you can sign up to have money deducted automatically from your paycheck or bank account, and the money in the Roth account grows tax-free for retirement.

Those with incomes exceeding a certain threshold are not allowed to contribute to Roth IRAs. For more information on income-related contribution limits, see the IRS website.

3. Contribute to a self-employed retirement plan. If you have any self-employed income, or even just do some freelance or consulting work on the side, then you can contribute to a small-business retirement plan. The two most-common options are a Simplified Employee Pension (SEP) or a solo 401(k).

The SEP is available at most banks, brokerages and mutual fund firms that offer IRAs. Visit the IRS for guidance on figuring out how much you can contribute. If you only earn a small amount of business income for the year, you may be able to contribute more money to a solo 401(k), but note that you cannot contribute more than your business income for the year. The money contributed to either account lowers your taxable business income and grows tax-deferred for retirement.

4. Roll over old retirement plans. Spouses of service members who move frequently often accumulate retirement accounts at different employers. If you have a new job lined up with a company that offers a 401(k), think about whether it makes sense for you to roll your retirement savings to the new plan. Costs and the investment choices you’ll have are important factors to consider. If you don’t have a new job or your new employer doesn’t offer a plan, then consider rolling the money into an IRA. This can expand your investing choices and might make it simpler to keep track of your accounts.

For all types of rollovers, transferring the funds directly into your IRA or new employer’s plan through the plan administrator allows you to avoid incurring taxes or penalties.

Talk with a tax specialist and/or financial professional about your personal situation and retirement needs.