Financial security tips for stay-at-home moms

According to a Pew study, of the 11 million parents in the U.S., about 27 percent are stay-at-home moms. What’s notable is that another recent study found that for the level of caregiving and responsibilities that stay-at-home moms have, it would equate to an earned salary of about $162,000.

Ahead of Mother’s Day, while we are busy celebrating our moms, grandmothers, aunts and all of the other inspirational women in our lives, we do want to take time to provide stay-at-home moms with some financial advice. Given they aren’t necessarily “earning” the salary previously mentioned, there are still ways that they can set themselves up for financial success.

One of the first, and easiest, ways that a non-working spouse can save, is to open a spousal IRA or Roth IRA. This allows the working spouse to contribute to an IRA for the non-working spouse. It’s recommend to try and max out this account – in 2019, a spousal IRA limit was $6,000 annually ($7,000 annually for those 50 and over). This would create a nice nest egg that grows each year to be set aside for a stay-at-home mom.

Another strategy is to consider taking up a side gig or part-time work. Perhaps it’s teaching work-out classes, selling artwork on an Etsy page, or becoming a sales consultant where you can make hours that fit easily with your lifestyle. Aside from earned income through these opportunities – in which someone could contribute to a Roth IRA or traditional IRA – some of these organizations even offer retirement plans, which would be an excellent resource to contribute and accumulate funds.

In addition to financial tips, there are also a number of other considerations a stay-at-home mom should keep in mind. One of the biggest mistakes we see women in this scenario make is relying on the working spouse to be the more financially-aware one in the relationship. Just because one spouse isn’t technically bringing in cash/income, it’s critical they still be involved in working with the couple’s financial advisor, understanding where assets are, how different buckets of their money works, etc. Especially, god forbid, if something were to happen to the working spouse, the non-working spouse needs to be equipped to seamlessly step in and keep the financial engine of the household going.

Couples should have Wills in place, and be updated/reviewed on a regular basis. They should also have disability insurance on the working spouse. Life insurance is another critical factor that could help with short- and even longer-term financial obligations, such as mortgage payments, childcare and college education.

It will be a balance and thought-out decision between you and your partner to forgo a traditional career to stay-at-home with children. But it’s important for women, especially due to factors like longer lifespans and the likelihood they will be caretakers to their aging parents, that they be informed on financial strategies so they can ensure a more streamlined path to retirement.

Nathan Boxx, Bradley Newman, Jason Seltzer

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