Couples Stand To Lose Nearly $50K a Year in Retirement Wealth by Not Choosing This Option

It's never too late to start planning for retirement—whether you're single or a couple—there's money out there to put away, but you need to choose the right option.

It all starts with your 401(k) and knowing the maximum, which is $24,500 per person.

"Couples treat retirement accounts as separate instruments rather than a system, and that is a major mistake," Chad Cummings, attorney and accountant with Cummings & Cummings Law, tells Realtor.com®. "When one spouse maximizes a traditional 401(k) while the other contributes to a Roth without coordination, the tax outcome in retirement depends on withdrawal sequencing, and most couples do not model it or even recognize the problem exists."

A 401(k) is a retirement plan that allows an employee to invest a portion of their paycheck before taxes are deducted to individual accounts. In some cases, employers can "match" or contribute to an employee's account.

The Internal Revenue Service explains that an underlying plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.

Generally, deferred wages (elective deferrals) are not subject to federal income tax withholding at the time of deferral, and they are not reported as taxable income on the employee’s individual income tax return, according to the IRS.

The IRA outlines the tax advantages of a 401(k):

• Employer contributions are deductible on the employer’s federal income tax return to the extent that the contributions do not exceed the limitations described in section 404 of the Internal Revenue Code. Refer to Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) PDF, for more information about deduction limitations.
• Elective deferrals and investment gains are not currently taxed and enjoy tax deferral until distribution.

Max your match

But how much you contribute could mean more money in your pocket during the golden years.

"The 401(k) limit for 2026 is $24,500 per person, with an additional $7,500 catch-up for those 50 and over," Cummings says.

He advises maxing out both, especially when employers offer matching.

"The deferral compounds the return itself. A couple that fails to jointly max contributions for 10 years forfeits almost half a million dollars … and even more when the market performs well," adds Cummings.

It's also important to keep in mind tax withholdings, because that will affect your refund come tax time.

"On withholding, I advise the minimum amount the law permits," says Cummings. "The IRS pays no interest on overpayments, and every excess dollar withheld is an interest-free loan to the federal government. Couples who file jointly but each set withholding as if single face a year-end liability, sometimes with underpayment penalties, because no one ran the combined numbers."

Money gets trickier if divorce enters the equation, something Cummings, as both an attorney and accountant, has navigated with his clients.

"A spouse who left the workforce to support the household has no retirement asset without a Qualified Domestic Relations Order protecting that interest," Cummings says. "Also, following a divorce, account holders should check and change beneficiary designations to avoid their former spouse inheriting their retirement portfolio. This happens all the time!"

Cummings shares this advice: "The bottom line is that married couples—even those who choose to keep their finances separate—should prioritize joint retirement planning to avoid leaving a significant amount of money on the table."