My husband and I are 40. I have $200,000 in student debt, while he has $600,000 in retirement savings. Are we in trouble?

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My husband and I are 40. I have $200,000 in student debt, while he has $600,000 in retirement savings. Are we in trouble?

I’m writing to ask for your advice on where to start to build wealth. My husband and I come from lower-income, financially unstable households. My parents were always in debt and struggled to pay bills. Neither of us had anyone to teach us how to manage money. As a result, I became very frugal, while my husband loves to spend (but thankfully generally abides by my buzz-******** “no, we’re not buying that” responses).

Our house is valued at around $775,000. I have $200,000 in student-loan debt. We are both 40, my husband works full-time, while I manage the household and all finances. We have two young children, 3 and 7 years old. I’d like to learn how to better manage our money to build wealth. I know nothing about investing, but I am a capable learner and want to know where to start. Where do we start? What’s our target retirement amount?

Neither of us will have an inheritance and everything we have, we built together. My husband will make $500,000 this year. If everything continues as expected, next year he should earn approximately $530,000, and will stay at that salary. Our kids attend private school, which costs about $30,000 a year each. We owe $460,000 on our mortgage with a 3% interest rate; however, we don’t view this as our forever home.

My husband and I have $135,000 in a savings account and $80,000 in a CD that will expire in June 2025. I have $58,000 in a Roth IRA. I also have an additional $35,000 in two 401(k) funds. My husband has $37,000 in a Roth IRA, in addition to $114,000 and $423,000 in two other private retirement accounts. We max out his retirement contributions. Are we doing OK? What do you advise?

Eager Learner

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Savvy tax planning, with the help of a financial adviser, could save you thousands of dollars, if not tens of thousands, over the next decade. – MarketWatch illustration

Before you do anything, deal with the $200,000 question. If you split, you will be the more financially vulnerable partner.

Federal student loans have an average rate of anywhere from 6% to 9%, while the rates for private student loans can hit double figures. Even if you’re earning a 4% return on your investments, you’re effectively losing money. Your husband makes a healthy six-figure salary, but it appears you are a stay-at-home mum taking care of your young children. That’s a full-time job, but the sooner you and your husband knock that loan on the head, the better you will be able to put money towards your retirement.

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Depending on where your assets are invested, your financial adviser — assuming you have one — may even have a non-practicing estate planning attorney in their organization, says

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, trusts and estates partner at Farrell ****** PC. “While these in-house attorneys cannot draft documents, they can review assets and any existing documents and suggest a plan to be reviewed, fine-tuned and implemented by your personal attorney. Collaborating in this manner can save you money in billable attorney time.”

In addition to a financial adviser, enlist an accountant and, possibly, an insurance broker, he adds. “In terms of the plan itself, your estate may or may not be subject to estate tax depending on the state in which you live and the years in which you **** — as you likely know, the federal estate tax exemption is scheduled to increase once more in 2025, but to decrease on Jan. 1, 2026, when the current law ‘sunsets.’” You will also be taxed on the interest from your CDs at your income-tax level.

While your finances are more modest than those of your husband, you are both in a very strong position for a couple of your age. “You have a very solid income,” says

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, a Los Angeles-based CPA. “Filing jointly puts you into a 35% tax bracket and, depending on your husband’s salary and income from your investments, when the current tax rates

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, you may find yourself in a higher tax bracket the following year. “On their liquid, post-retirement dollars, you really want to have a tax strategy,” he adds.

Ringbauer says some savvy tax planning, with the help of a financial adviser, could save you thousands, if not tens of thousands, of dollars over the next decade. It’s great that your husband is maxing out his 401(k) for example, but there will come a time when those pre-tax contributions will turn into taxable withdrawals. Likewise, if you are planning to sell your house in the future and downsize, thereby releasing that equity, keep records of all improvements for deductions on your $500,000 capital-gains tax exemption for a married couple.

Given that we are now in the fall, let me remind you of some old chestnuts that you should consider: advanced healthcare directives, long-term care insurance, an emergency fund of 6 to 12 months of expenses. Durable powers of attorney should you or your husband become incapacitated. Make a will, and review it every 3 to 5 years. And, of course, tax-advantaged 529 plans for your children’s university education. These are all luxury “problems,” the kind that you are blessed to have. Compared to most Americans your age, you’re doing more than OK.

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#husband #student #debt #retirement #savings #trouble

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