Don't Wait for Washington to Give You a Tax Cut

Here's the second in our series on Couples & Money. The first article showed you how to do your taxes without getting divorced.

Why You Should Each Have Retirement Accounts
"Both partners in a marriage should fund for retirement," says investment specialist David Bach, whose California firm manages more than half a billion dollars of individual investors' money. Bach, author of Smart Couples Finish Rich, (Broadway Books), says, "The single biggest mistake I see women make with money is never funding a retirement account because their husband has a 401(k)."

Women, especially, can benefit from having their own retirement account if they are widowed, Bach says. What's more, "if a couple gets divorced, the retirement assets in most states are split 50/50."

Bach says it's vital for both people in a marriage to fund for retirement because they are going to need the money in their mature years. "One IRA plan plus Social Security benefits won't be enough," he warns.

Another reason why both partners should fund for retirement is to take advantage of the tax write-off. "If both people fund a 401(k) plan in 2001," Bach explains, "they can each save $10,500 and this is a total tax write-off."

A similar situation prevails with deductible IRAs. If both spouses fund a $2,000 IRA, then they both get a $2,000 tax write-off. "That's huge," Bach says.

Attorney Peter Gellerman of Santa Monica, Calif., says, "You'll never regret funding an IRA." Gellerman, who specializes in estate and retirement planning, offers these suggestions for ensuring financial security: