Retirement Planning for the Stay-at-Home Mom

With the hustle and bustle of raising a family, many stay at home moms overlook their own retirement planning.  Many women run the household finances and the needs of the entire family, but it is also important to think about the future and plan for the retirement that they envision.

Stay at home mom have retirement saving options such as a spousal IRA.  Mom do not neglect saving for your retirement.There are so many benefits of raising a family and the ability to stay at home is usually a decision that is difficult to make.  While staying at home can be emotionally beneficial to you and your children, the financial challenges can be great. 

In terms of retirement planning, it can include the loss of retirement contributions (which includes any employer matching contributions) and possibly a lower Social Security benefit when you reach retirement age.

However, there are steps that you can take to participate in retirement planning.  Here are five ways that you can save for your retirement:

1)   Rollover your existing accounts to an IRA account.  If you contributed to an employer sponsored retirement plan before you stopped working outside the home, you should roll over the funds into a self-directed IRA account.  This will allow you more control of the investment decisions such as time frame, risk tolerance, and investment goals.

Many people forget about the plans when they stop working and easily lose track especially if they have had more than one employer.  Generally, you can combine the accounts into one individual retirement account and contribute to it in the future.  Do not cash out the account because you will incur a tax penalty and harm your retirement income.

2)   Consider a spousal IRA.  This allows you to contribute money to a tax-advantaged retirement savings account even if you don’t have earned income, as long as your spouse does have earned income.  As long as you and your spouse file a joint tax return, you can make a contribution of up to $5,500 ($6,500 if 50 or older ) towards a spousal IRA each year.

Note:  there are some deductibility issues based on your joint adjusted gross income.  A spousal Roth IRA is also an option with contributions being made with after-tax dollars.  The Roth IRA account earnings and contributions can be withdrawn tax-free after age 59 ½ provided that the account has been opened at least five years.  Always best to consult your tax professional concerning your individual situation.  (Note: there are some adjusted gross income based contributions limits).

3)   Open a taxable investment account.  Regular savings each month will add up over time.  Even a small amount invested each month will help grow your overall portfolio.

4)   Establish an individual 401(k) or SEP IRA.  If you are a stay-at-home mom who runs a home-based business or freelance on the side, you may be eligible to set up an individual 401(k) or SEP IRA. The amount you can contribute depends on your income, but could be as high as $50,000 per year.

5)   Maximize your Spouse’s contributions.  Make sure that your spouse is contributing as much as possible to an employer sponsored retirement plan.  This way – as a couple – you are saving as much as possible for retirement.

Being a stay-at-home mom is one of the most rewarding jobs in the world, and planning for your future while doing it can be difficult.  But, you deserve and need to plan for your retirement and insure that you have the future that you envision.

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The foregoing content reflects the opinions of Crimmins Wealth Management and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

About Maureen Crimmins

Maureen Crimmins is co-founder of Crimmins Wealth Management and a fee-only independent financial advisor. Have a financial question? ASK MAUREEN


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