When most people think of retirement planning, they wonder what they’ll do when the weekly paychecks stop coming in. However, for a stay-at-home spouse, it can be easy to put off Personal Retirement Planning. This can be a big mistake, as the at-home spouse is typically financially reliant on the other partner’s income. Follow these steps to ensure that retirement planning stays on schedule, even when a parent is out of the workforce.
Get Involved With Family Financial Planning
Many couples have a spouse that stays home to care for the children. Despite the fact that the at-home parent isn’t making a financial contribution, retirement and investment planning should be a joint effort. If the family has a financial planner, both spouses should visit so everyone’s on the same page with retirement planning.
Start a Spousal IRA
Although the at-home spouse has no job, he or she can still put money in a retirement account. It’s wise for each spouse to have money in his/her name, and to avoid putting all the funds into the working spouse’s name. This can help an at-home spouse build a measure of financial independence, and a spousal IRA can give a single-income couple the chance to access tax-protected retirement accounts.
Have Solo Credit Cards
If the at-home spouse ever needs to borrow money in his/her own name, they should have an established credit profile. Start the process by establishing a credit card in the at-home spouse’s name and paying it off in a timely fashion.
Learn About Social Security Benefits
Even if a spouse has not worked, they are eligible for up to 50% of the other spouse’s Social Security payments. The benefits the non-working spouse receives in this way have no effect on the amount the working spouse can collect. However, if an at-home spouse spends time at work making a salary, they may be able to get more by claiming their own benefits.
Plan for the Worst-Case Scenario
When a spouse lacks income, the other spouse’s disability or death can be a catastrophe. That’s why it is important to ensure that the family is adequately insured to cover such events. At-home spouses should not assume that the other spouse has taken care of things in a manner that would leave them comfortable when the unthinkable happens.