Stay-at-Home Parents Need Retirement Savings, Too

A recent survey from Pew Research found that about one in five U.S. moms and dads are stay-at-home parents. And, the 2015 Aegon Retirement Readiness Survey says that 65% of those who self-identified as homemakers are financially relying on their spouse or partner for retirement funds. The same study shows that 26% of homemakers expect they will need financial assistance from a family member (other than their spouse/partner) in retirement.

What does this data mean? It means that the stay-at-home sector could benefit from some financial education and retirement planning.

Options for saving money in your own name
It’s not necessarily a bad move for a couple with one bread-winner and one caregiver to plan their retirement using the savings from only one retirement account. However, many stay-at-home parents prefer to have their own savings—especially if they are making money from a home-based business.

Here are your options in this situation:

• Spousal IRA—Most retirement accounts don’t allow you to contribute if you don’t have any earned income. However, if your spouse is bringing in an income, you can contribute to a spousal IRA (traditional or Roth IRA) which is held in your name. To qualify, you need to be listed as having joint filing status on your tax returns. In 2019, a spouse can contribute up to $6,000—or $7,000 if above age 50. Keep in mind, depending on your joint income, these limits may change.

Tips for boosting your spousal retirement savings
When it comes to saving for retirement, living on one income can seem like an exercise in futility. But there are ways to make the money go further.

• Prioritize retirement over education—If you have kids at home, it’s assumed that you should save all you can for their education. However, according to most financial experts, retirement savings should come before education savings. Why? The answer is simple—there are loans available to cover education costs, but no such loans for retirement.

• Pay yourself first—When you’re managing a one-income family budget, every penny counts. Combat the temptation to spend money before setting it aside in savings by automating your contributions.

• Lock down your budget—Now’s the time to really track every dollar. When you’re trying to squeeze a little more for your savings, a budget can be a game changer. After a few months, you’ll recognize patterns and areas that can be trimmed.

• Keep your skills sharp—If there’s a possibility that you’ll be heading back to work at some point, be sure to keep your skills up to date. This will help you hit the ground running when the time comes.

• Try a side gig—Make a little extra cash by getting paid for sharing your skills. If you’re proficient at sewing, dog-sitting, gardening, social media or any other consulting-type role, consider getting paid for it.

If you’ve made the decision to be a stay-at-home parent, you don’t have to rely solely on your spouse’s retirement fund. Take the time to meet with a financial advisor on the best way to get the retirement you want.