Being a stay-at-home mom has many wonderful perks. I have been a stay-at-home mom, but have also worked away from the home and have worked from home. One of the biggest perks from my former work days was having a company matched 401(k) plan and a pension. (Yes, I worked for one of the few companies on the planet that still offers an employee pension plan.) Not having an employer sponsored savings plan makes it a bit more challenging for stay-at-home moms to save for retirement. I am by no means an expert on financial planning, but have learned from my experiences and mistakes. I’ve also found some really great online resources to help me plan my retirement.
Before you start saving for your golden years, I think it’s important to get your house in order and I don’t mean organizing the pantry. It’s important to first focus on getting out of debt and establishing an emergency fund. Many financial experts recommend having an emergency fund equal to 3 months of your living expenses. I know if you’re struggling to buy diapers each month, this can seem like a bit of a stretch. But there are ways to save by cutting expenses, sticking to a budget, Â and generating other income sources.
Once you’ve gotten your house in order, what do you do with that extra cash?
Rollover your 401(k) from your previous employer into an IRA. “If you participated in a 401(k) plan at your last job, don’t leave the money behind and please please don’t cash it out. If you cash it out, you may be subject to early withdrawal penalties, and you’ll probably have to pay income taxes at your current ordinary income tax rate. Trust me on this one.
A better option may be to rollover the funds into an IRA.
Open a spousal IRA. According to the law you cannot contribute to an IRA unless you are working. However, if you are married you are allowed to open a spousal IRA if one person is staying home and not earning an income. With this option, your spouse can contribute up to $5,500 per year (or $6,500 if you’re age 50 or over) to either a traditional or Roth IRA in your name. It’s important to note that you and your husband must file a joint tax return to be eligible for a spousal IRA.
Increase your spouse’s contributions. If your spouse is currently contributing to his employer’s 401(k), consider increasing that contribution.
Consider Social Security Benefits. While you don’t want to rely on Social Security benefits, stay-at-home spouses can claim a benefit based on their partners. If you are married to your spouse for at least 10 years, you are entitled to that money – up to half of the main recipients benefit.
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Thanks for the tips! I’m a work-at-home mom, but I have nothing in my retirement savings yet. Eek!
This is one of the reasons why I’m glad I continued working when my kids were really small. It’s been tough on us, putting the kids in daycare, but I’m glad that I have a retirement fund to depend on someday. I never realized there were so many options for WAHM.
I will be working til I’m dead at the rate I’m going :/
I need to work on my retirement now that I work from home. It’s tough to save.
I was a SAHM for many years with no retirement plan :(. Now I work outside the home for a company with an awesome employer contribution retirement plan. Thanks for sharing these great tips.
Great suggestions, thanks for sharing.
Great tips. I’m 21 but seems how my bf of 5.5 years and I are both self employed, retirement will be a huge priority for us.
My husband and I are both self-employed, so we have to be sure to make our retirement fund a top priority.
These are great tips! I used to love my employer matching 401K too and now that I’m home I’m always looking for tips like these on how to save for retirement. It’s very important for me to do so because when my grandma moved into an assisted living facility, it was a wonderful place but it really opened my eyes to just how expensive it is.
This is something we need to do bigtime!!! It’s so hard to just pay the bills every month, let alone put any aside. Thank you for these great tips!