Retirement planning for stay-at-home spouses


Most people think about retirement planning in terms of preparing to stop working. But what if you’re a stay-at-home mom or dad and don’t have employment? Retirement planning is just as important for you, and possibly more so. But your circumstances can make it complicated.

Stay-at-home spouses are often so focused on making the household run that they neglect planning for their own futures. With no steady paycheck, it can be easy to forget to save for their senior years. Stay-at-home spouses tend to depend on their partners for financial planning and security. According to a report by the Transamerica Center for Retirement Studies called “Homemakers Are Not Off the Hook”, just 44 percent of stay-at-home spouses in the United States are saving for retirement, and less than a third save on a regular basis.

But homemakers have an even greater need to prepare for their futures than their partners. When only one spouse has income, the financial impact of their death or disability can be tremendous. So it’s crucial, as a stay-at-home spouse, to be prepared for contingencies. Here are some suggestions.

Be knowledgeable and involved in the family financial planning. Even if one spouse has no steady income, financial planning has to be a team process. Both spouses need to know what financial assets and arrangements are in place and have input into the preparations. Both spouses should participate in major financial decisions and meetings with financial advisors.

Address your financial needs. Even if you’re not receiving a steady income, the household likely is still dependent on you. If you are suddenly forced to work outside the home, you cannot take care of the home as you used to. Life and disability insurance for the working spouse should be strongly considered. Also you and your spouse should have an emergency cash fund of at least six months’ income and you should have immediate access to it if needed.

Create your own accounts. If you’re eligible for a spousal IRA, consider opening one. Most people are eligible to contribute to a spousal IRA even if they’re not working. If you have an old 401(k) from a former employer, you can roll that over into an IRA. A spousal IRA also enables you as a couple to increase your tax-deferred savings, if the working spouse has maxed out their own accounts. Also consider opening your own credit cards. These will enable you to build up your own credit history in case you ever need it. Having your own accounts will get you in the practice and mindset of independent financial planning.

Know your Social Security benefits. As part of planning for retirement, you’ll want to know what your Social Security benefits will be. You’re normally eligible for spousal benefits based on your spouse’s earnings. If you have your own benefits from previous employment, you’ll want to do a comparison to see which is greater, and determine the best timing to apply for benefits.

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