How to Save for Retirement When You’re a Stay-at-Home Parent

5 Minute Read

If you work as a stay-at-home parent, you might think saving for retirement isn’t an option for you. After all, most kids don’t hand out 401(k) plans with an employer match, no matter how many hours you spend caring for them.

But we’ve got good news: You can save for retirement! Here’s how.

The Spousal IRA: No Personal Income Needed

Rich Pombo, an investing professional in Albany, New York, says his wife has been a stay-at-home mom for 27 years. “I wouldn’t trade it for the world,” he says. “The fruit it produces is amazing.”

But no matter how hard Rich’s wife worked to keep the household running, one worry persisted.

“My wife would feel like she wasn’t contributing enough,” he says. That’s because she was looking at it from a purely financial standpoint. “Even though my wife and I see the money I earn as our money, there’s still some part of her that sees it as money she can’t spend.”


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Rich realized setting up a spousal IRA could help his wife feel more empowered. “Having an IRA in her own name helps her see that she’s building her own wealth,” he says.

A spousal IRA enables you to set up a retirement account in your own name. As long as one person in your household brings home a paycheck and you file a joint tax return, you’re good to go.

You can choose between a traditional and a Roth IRA.

  • A traditional IRA works much like a 401(k). It’s tax-deferred, which means you don’t pay taxes on the money you invest until you withdraw it.
  • A Roth IRA uses post-tax dollars, so your investment grows tax-free. Any money sitting in a Roth IRA at retirement is all yours.

Dave recommends the Roth option. You can contribute up to $5,500 ($6,500 if you’re 50 or older) to a Roth IRA this year. Income limits do apply, so check with an investing professional to see if you qualify.

Breaking Down Your Retirement Cash

So where does all this money come from if you don’t get paid for all your hard work as a stay-at-home parent? We’re glad you asked!  

Remember, Dave recommends putting 15% of your household income toward retirement. If your spouse brings in 100% of your household income, then it’s just a matter of how you allocate that 15%.

If your household income is $60,000 a year, that means you should invest $9,000 a year—or $750 a month—for retirement. Here are two ways you could break that investment down.

Scenario 1: Invest the Entire 15% in Your Spouse’s Name

In our first scenario, Tom works full-time and gets a 3% match on his 401(k) contributions. His wife, Jenny, stays home to care for their two kids. They decide to invest their entire 15% under his name.

Tom’s 401(k) is a traditional tax-deferred plan that offers good mutual fund options, so they come back to it after maxing out his Roth IRA.

Scenario 2: Split 15% Evenly Between His and Hers Investments

Now let’s see how things would look if Tom and Jenny split their 15% evenly, giving them each 7.5% to invest for retirement.

Dividing their retirement investments evenly doesn’t just enable Tom and Jenny to build equal stakes in their future. It also means more of their nest egg is safe from taxes in their golden years.

If we compare these two scenarios side by side, you’ll see that putting all of Tom and Jenny’s retirement cash under one name means nearly twice as much is invested in a 401(k), making it subject to taxes when they withdraw it.

Of course, everyone’s situation is different. Your spouse’s 401(k) might offer a Roth option or have terrible mutual funds to choose from. Or you might have a home-based business, which opens up even more investing possibilities. A good advisor can help you sort through your options and outline a retirement plan that’s right for you.

You’ve Got This

There’s no higher calling on the planet than parenthood.

If you work as a stay-at-home parent, you bust your tail seven days a week and never leave the “office.” With no paycheck—and often no recognition—it can be easy to lose sight of the tremendous value you bring to your household.

But every shoe you tie, cookie you bake, and hug you give lays a firm foundation of love for your family. Just don’t let the everyday to-dos keep you from building a secure future for yourself. Because, as strange as it may sound, that’s an important part of loving your children well too!

Want peace of mind for your family and your future? We have people who can help—investing advisors like Rich Pombo who have heart for service and are Dave fans just like you. Your investing advisor can help you devise a plan that brings your hopes and dreams to life and puts your fears and challenges to rest. Schedule your free consultation today!

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