Making the decision to have one parent stay at home is something that many families will have to debate. There are many positive points to having two wage earners in the home and there are just as many pros for having a parent caring for the children full time. The money issue for a stay-at-home parent is a true concern. Here are some ways to plan out retirement solutions before becoming a stay-at-home parent and maintaining them afterward.
Make a personal savings account
Having access to money after quitting can take a lot of planning out. During the first few years of losing one income, there can be a major learning curve, and as the stay-at-home parent, things may be more tight for your personal funds. To make it a little bit easier, stash away all of the income possible prior to leaving. Put the income inside of an interest-earning account, such as a money market account. Anytime you have extra or left over money from the budget, add some to this account. The goal is to keep this account growing a little at a time until retirement.
Open a spousal IRA
The working spouse can open up an IRA account for their nonworking spouse. Despite the amount of income that the family brings in, both individuals having an IRA is imperative. Both IRA accounts should be contributed to equitably. In the event of a divorce, dividing up IRA proceeds when both individuals have the same, or near the same, amount inside of their accounts will make things easier for everyone.
Perform some paid work
In order to contribute any type of money into an IRA account, you will need to earn wages for that year. Performing some paid work, even as a stay-at-home parent, will provide you with this ability. There are a number of things that you can do from home, such as make online sales, join ride share programs, or make deliveries. Join programs that you can perform on your time. This will allow you to contribute earnings to your IRA account without having to depend on your spouse's income only.
Pay off all liabilities
Anything that can be considered an asset should be paid off as soon as possible. Purchase in full or pay off the mortgage to the home as quickly as possible so that it will not be a liability into retirement. Purchase lower cost cars with statistically long lives in order to decrease the amount of liabilities that your household will have to pay off. Gaining assets and lowering liabilities will make retirement a more comfortable venture for stay-at-home parents and their working spouse.
For more information, contact a company like Family Financial Partners.