When Does a Spousal Roth IRA Make Sense?

Summary

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Podcast Summary

Podcast: Ramsey Everyday Millionaires
Episode: When Does a Spousal Roth IRA Make Sense?
Date: January 7, 2026
Hosts: Ken Coleman & Stacy (Ramsey Network)
Caller: Alice, Albuquerque, New Mexico

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Main Theme & Purpose

This episode explores the practical decision-making process for retirement savings, specifically focusing on whether to continue contributions to a spousal Roth IRA versus setting aside money in various “buckets” or envelope funds for emergencies, vacations, and future expenses. Alice, a listener in her mid-60s, calls in seeking guidance, and the hosts provide tailored advice rooted in Ramsey’s principles, covering investment strategy, emergency savings, and preparing for future needs while addressing emotional aspects of financial security.

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Key Discussion Points & Insights

1. Alice’s Financial Snapshot

• Assets: $1.5 million in retirement accounts (401ks, 403bs, Roth IRA, PSP).
• Home: Paid off; valued at ~$350,000.
• Vehicles: Paid off.
• Debt: Minimal credit card balance, paid monthly.
• Income: Husband (working for 10–12 more months) earns $80,000/year.
• Cash: $10,500 emergency fund; uses cash envelopes for vacation, future car, etc.

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2. Should She Continue with a Spousal Roth IRA?

• Stacy:
  • Recommends maintaining at least a 6-month emergency fund before additional investment.
  • Suggests investing a minimum of 15% of income for retirement (Ramsey standard).
  • If this 15% is met, supports saving extra for vacations or large purchases in cash.
• Ken:
  • Agrees with Stacy; validates that Alice and her husband are financially solid and managing risk responsibly.
• Stacy:
  • Emphasizes that with their retirement assets and no debt, the small decision about a few thousand dollars for the spousal Roth IRA vs. extra savings “won’t mess it up at this point.”

    “I don’t think that you can mess this up at this point with the couple of thousand dollars that you’re talking about here.” (04:28, Stacy)

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3. Concerns About Rising Costs & Leaving an Inheritance

• Alice:
  • Expresses worry about cost of living increases and hopes to leave an inheritance to her children.
• Stacy:
  • Reassures Alice:

    “You could pull $150,000 a year from that [the $1.5M nest egg] and never touch the nest egg, essentially… That’s more than what your husband earns now.” (04:54, Stacy)

  • Adds that Social Security will also help and “there’s definitely plenty of wiggle room.”

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4. Where Should She Keep Her Envelope/Bucket Funds?

• Alice:
  • Currently keeps cash in envelopes at home, including the emergency fund.
• Stacy:
  • Suggests moving the emergency fund ($10,000+) to a high-yield savings account for safety and better returns.

    “I would definitely put that in a high-yield savings. If it makes you feel better to have a little bit of cash on hand in the house, that’s totally fine as well.” (06:38, Stacy)

  • Admits she also keeps some cash at home “just in case,” likening herself to “Jason Bourne,” ready for emergencies (light-hearted).
• Ken:
  • Jokes about practicality—having cash is only so useful in disaster scenarios:

    “You have all that cash and the zombies will still get you.” (06:28, Ken Coleman)

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5. Running the Numbers and Anxiety About ‘The Number’

• Ken:
  • Encourages listeners to regularly “run the numbers” at several different rates (10%, 8%, 6%, 4%) to understand what’s needed for retirement drawdown and to feel secure.

    “Run it on a 10%. Run it on 8, run it on 6, run it on 4.” (07:45, Ken Coleman)

• Stacy:
  • Adds that calculating with inflation subtracted (e.g., 4% for inflation) helps create realistic plans.

    “…then take out 4% for inflation. Right. And then all of that is helpful.” (07:51, Stacy)

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6. Personal Preparedness and the Human Side of Money

• Stacy:
  • Shares her habit of keeping “documents in order,” texting her brother with the location of her will when traveling—prepping for the unforeseen.
• Ken:
  • Jokes the only advantage of cash in emergencies might be “getting to the front of the line for coffee.”

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Notable Quotes & Memorable Moments

• Stacy (on being methodical):

  “I love how methodical you are, Alice. I just love how she’s just been thoughtful about putting it in the envelope, put it to the side.” (07:24, Stacy)

• Stacy (on cash at home):

  “Like, I’m like on Jason Bourne. I’ve got the passports and the cash right there.” (06:21, Stacy)

• Ken (on the limits of prepping):

  “You have all that cash and the zombies will still get you.” (06:28, Ken Coleman)

• Stacy (reassuring Alice about inheritance):

  “You could pull $150,000 a year from that and never touch the nest egg…” (04:54, Stacy)

• Ken (on number running):

  “Run it on a 10%. Run it on 8, run it on 6, run it on 4.” (07:45, Ken Coleman)

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Timestamps for Key Segments

• 00:18 – Alice shares her current retirement savings strategy and questions.
• 01:23 – Discussion of Alice’s retirement assets, debts, and budget.
• 03:23 – Hosts evaluate vacation/car savings vs. spousal Roth IRA contributions.
• 04:34 – “You can’t mess this up…” – Reassurance of financial stability.
• 04:36 – Alice’s concerns about rising costs and inheritance.
• 05:38 – Where to keep the emergency fund (cash vs. high-yield savings).
• 06:28 – Ken’s lighthearted “zombies” comment.
• 07:31 – Methodical saving and organizing financial life.
• 07:45 – Advice to run retirement income scenarios at different rates.

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Tone & Takeaways

The tone is warm, supportive, and occasionally playful, blending practical financial advice with empathy for the emotional side of preparing for retirement. The episode emphasizes that strong foundational habits (like Alice’s envelope system and debt-free living) provide a great deal of financial resilience, and that with substantial retirement savings and a paid-off home, small tactical decisions about a few thousand dollars will not derail long-term security.

Key Takeaways:

• Maintain at least six months' living expenses in a liquid emergency fund before prioritizing extra investments.
• Continue the spousal Roth IRA or extra saving if above the 15% guideline for retirement investment.
• High-yield savings accounts are preferable to large amounts of cash at home, though having some cash is fine for personal comfort.
• With substantial retirement assets, debt-free lifestyle, and prudent planning, it’s very unlikely that small decisions will threaten retirement security.

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Transcript

[Ken Coleman]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Alice is up in Albuquerque, New Mexico. Alice, how can we help you today?

[Alice]

Hello. Thank you so much for taking my call. My question is, does it make more sense to contribute money to a spousal Roth IRA or to continue doing what I'm doing, which is currently setting money aside in an emergency fund and other expected expenses such as vacation, maybe a future car purchase, et cetera. My husband's going to continue working for about another 10 months to 12 months.

[Stacy]

Okay, so this is in. This is you planning for retirement?

[Alice]

Yes.

[Stacy]

Okay. How old are you guys?

[Alice]

I'm 65. My husband is 64. I retired in 2015 to take care of my mother, and then I took care of my sister who had early onset Alzheimer's. And so I been out of the workforce for quite a while.

[Stacy]

Okay, and so tell me what you guys have so far in retirement together.

[Alice]

We have about 1.5 million in 401ks, 403bs Roth, and my husband has a PSP.

[Stacy]

Okay. And is there anything else? Tell me about your other assets. Do you own your own home? Do you still have a payment? Tell me about that.

[Alice]

Our home is paid off. Our vehicles are paid off. My car is a 2012, and I don't have to have a brand new car. That's not my thing. I'd rather not have a payment, but I know that I might have to purchase a car car in the future. So that's one of the things that I plan on setting money aside for as well.

[Stacy]

Okay.

[Alice]

And otherwise we have minimal credit card debt and we pay groceries, utilities, cable, Internet, our phones, and that's pretty much it.

[Stacy]

Okay, got it. What's the home worth?

[Alice]

In our area? Probably about 350,000.

[Stacy]

Okay, good. Now, what's your husband work? You said he's working 10 to 12 more months. What's he earn?

[Alice]

He currently earns about 80,000 annually. And so we've worked really, really hard to pay down debt. And I've been doing the spousal Roth contributions and I've currently stopped. I don't always have the money to do that, but my thinking was, does it make more sense to contribute to the Roth since he's going to be off work in about 10 to 12 months when he retires, or do I just keep putting money away and what I do. And I know this is probably something that you're not going to agree with, but I have little envelopes in other words, little buckets. And I put money aside for an emergency fund. I currently have 10,500 set aside in the emergency fund. And then if things get better, Israel, we. That would be kind of our dream vacation Israel.

[Stacy]

Okay.

[Alice]

And so.

[Stacy]

So for vacation, for that. Okay. I, you know, I. I'm not mad at that. I'm guessing he's contributed, continuing to contribute on his end to a Roth IRA as well. And so the spousal. You're kind of like, do we still need it? Um, I like the idea that you've been saving an emergency fund because you do need some liquid money. We would suggest six months of liquid money. It's just good to have there so that you're not having to pull, you know, things out of investment for emergencies and things like that. I'm not. My, My framework on this would be you need to be investing at least 15% of the income. That's kind of where we sit. If you're investing 15%, whether it's in Roth IRAs, spousal IRAs, 401ks, wherever you choose, everything else from there on. Yeah. If you want to save up some more for vacation, if you want to have a little. If it makes you feel comfortable to have a little bit more cash money, I'm not upset with that. You guys are doing really, really well. 1.5 million in retirement. I paid for $350,000 home. I. I don't think that you can mess this up at this point with the. The couple of thousand dollars that you're talking about here.

[Ken Coleman]

Yeah, I agree.

[Alice]

Question. Question for you. So the 1.5 million or so, I felt really comfortable with that. But for the last almost five years, things have gotten so much more expensive. And I would like to leave a little inheritance for my kids.

[Stacy]

You will.

[Alice]

Okay.

[Stacy]

And let me explain that so that you'll understand it. So you've got 1.5 million here. Let's pretend that the interest on that is about 10, 10%. Right. That's the compounding growth that's occurring. You could pull $150,000 a year from that and never touch the nest egg, essentially. Does that make sense? Which is more than what your husband earns now. He earns 80,000 a year.

[Alice]

Okay.

[Stacy]

So you'll have more than enough to continue to live. Plus you both will receive Social Security, or at least he will. Do you see what I'm saying? So there's definitely. There's definitely plenty of wiggle room there. You will have plenty to leave to your heirs or anybody that you know is going to be a beneficiary on this.

[Alice]

Another question. So the money that I have in the little buckets I keep, it's not invested. I keep it at home in envelopes in a safe. And you might get mad at me there, but should I be putting that in a high yield savings account like my emergency fund?

[Stacy]

That'd be great to do that. Now, I'm not going to lie to you. I have cash. I like having cash that I can get to. And I also keep my main emergency fund in a high yield savings account, but that's just because I'm a real. Ken, you don't keep any cash in the house. Okay. You don't keep any cash in the safe. Okay.

[Ken Coleman]

You're asking.

[Stacy]

I'm just saying I like to be ready. Like, I got. I'm like on Jason Bourne. I've got the passports and the cash right there.

[Ken Coleman]

I'm ready to go. I just know there ain't much you can do about it. You have all that cash and the zombies will still get you. You.

[Alice]

Oh, my.

[Ken Coleman]

I don't worry about it.

[Stacy]

My point is, Alice, if, you know, I. The 10,000, I would definitely put that in a high yield savings. If it makes you feel better to have a little bit of cash on hand in the house, that's totally fine as well.

[Ken Coleman]

The other thing is, like, people come knock on my house, try to take stuff and go, you're welcome to my shoes. There's a decent amount of money there. But me too.

[Alice]

There's no safe on radio or.

[Ken Coleman]

What's that?

[Alice]

I just said it live on radio.

[Stacy]

That's all right. They don't have your address.

[Ken Coleman]

It's okay. We haven't told them who you are. You're going to be okay. But yet the answer is. The answer is yes, you. Your money is safe. I feel it's very safe. Put it in, you know, a high yield savings. That's the best place. Why not get the money on.

[Stacy]

Yeah, it's got a little bit of.

[Ken Coleman]

Interest envelopes, you know, and so, yeah, that's why we. That's why we.

[Stacy]

But I love how methodical you are, Alice. I just love how she's just been thoughtful about putting it in the envelope, put it to the side, and you.

[Ken Coleman]

Guys are going to be fine. And I love how you walked her through the real numbers there. You know, I think people need to know when you go, what's my number? In other words, what. What's the nest egg? The retirement nest egg, where I feel like. And I love the exercise where you walk through and by the way, run the numbers.

[Stacy]

Yes.

[Ken Coleman]

Run it on a 10%. Run it on 8, run it on 6, run it on 4.

[Stacy]

Right. Run it on 10. And then you, and then take out 4% for inflation. Right. And then all of that is helpful.

[Ken Coleman]

Run those numbers so you can see what it is you need and you make those ad. But you guys are going to be fine. I'm not worried about that at all. But you for real do the whole safe thing.

[Stacy]

Look at my face, Ken Coleman.

[Ken Coleman]

Okay. Well, I'm not surprised. I'm not surprised.

[Stacy]

I think that now, don't get me wrong, it's not too, it's not any, you know, I'm not going against the baby steps. I still do all the things that the baby steps say. It's just in addition to, I feel good knowing, you know, something goes down and you just need to get to. This is. You never hear me spin out like this, but something goes down and you just need to get to the airport and get out of the country.

[Ken Coleman]

Right.

[Stacy]

I'm going to be ready to go.

[Ken Coleman]

You are ready.

[Stacy]

Yeah.

[Ken Coleman]

You've got, you've got a little, you got a little pack bag in the safe.

[Stacy]

It's all, there's no bag. It's just the documents in order. Gosh.

[Ken Coleman]

Oh, man.

[Stacy]

I just think about that when I go out of town. I text my brother and I'm like, here's where the will is. Here's where like, I, I, I just prepare in that way. Yeah.

[Ken Coleman]

Well, now our whole family knows that if something were happening, Stacy and I traveling, we, We've got a spot for that. I get that. But in your scenario where you got to get out of town, you realize everyone else is at the, is at the airport. The only thing that cash does is, is put you at the front of the line for coffee because you're offering more money. It's a disaster by that point.