One of the last things people think about when deciding whether to become a stay at home parent is how it will effect their retirement. After all, retirement is so far off in the future and there are so many financial demands to deal with right now. Don’t miss this important response to a readers question from Suze Orman about retirement planning for stay at home parents.
Retirement Plannning for Stay at home Parents
Q: For now I am a stay-at-home mother of two. My husband makes a good living, and we’re in solid financial shape. The only thing that nags at me is that because I’m not working, I am not contributing to Social Security or saving for my own retirement. What are my best options? Should I contribute to my 401(k) from a past job or open a new account? I could contribute $400 each month.
A: It kills me when stay-at-home moms sell themselves short. You are working—you just aren’t getting paid for it. I also noted that you refer to saving for “your” retirement. If you and your husband decide that you’ll be the stay-at-home parent, his income needs to pay for both of your retirements.
As for Social Security, stay-at-home spouses can claim a benefit based on their partners. Even if you divorce, if you were married for at least ten years, you’re entitled to that money, which can equal up to half of the main recipient’s benefit. So, if your husband will get $1,000 each month, you would get $500. AARP has a calculator that parses all the variables. (Type “AARP Social Security Benefits Calculator” in your Web browser.)
I’ve been a stay at home, work at home mom for many years and I was very concerned about my retirement funding. I decided to create an automatic withdrawal from my checking account into my savings account each week. I then take that amount and put it into an IRA just for me. It was a difficult at first because there wasn’t a lot to take from the budget but I’m doing it, and it’s adding up.
How are you preparing for retirement? Have you thought about it at all?