Best Retirement Options for Stay at Home Moms
If you stay at home and don’t work at all, you probably don’t have a retirement fund. But you’ll need one when you’re old enough to collect Social Security because we all know SS income won’t support anyone on its own – you need supplemental income.
While relying on your spouse’s income during retirement may seem ideal, it’s always a good idea to have your own money saved too. You never know what may happen and it’s always better to be safe rather than sorry.
So how do you save for retirement if you stay at home? Here are a few simple options.
Do you have an IRA at a Previous Employer?
If you worked before, you may have contributed to an IRA or 401K. If you did, it’s time to roll it over as it is likely sitting there doing nothing (not collecting interest).
If you roll the funds over, you aren’t responsible for taxes and there aren’t any penalties. Instead, you’ll put your money in an account that you can manage. Find an online broker that you are comfortable using, like Wealthfront or Betterment.
Pay close attention to the fees, investment options, and minimum account balance requirements before choosing an account.
Does your Spouse Work?
If you stay at home, your spouse likely works. If so, he can open a spousal IRA in your name. Even though you don’t work, your spouse does and he can contribute up to $6,000 in your account per year. If you’re over age 50, he may contribute an additional $1,000 catch-up contribution.
The only thing you need to qualify for a spousal IRA is to be on your spouse’s tax return. In other words, you must file married filing jointly in order to contribute to your spousal IRA.
Are you Self-Employed?
If you make money from home, even if you sell crafts to yourneighborhood, you are self-employed and can open an SEP IRA. The account is a bit more complex and has more regulations, but its contribution limits are higher depending on how much money your business brings in. If you want to go the self-employed route, talk to your financial advisor about the best choice for an SEP IRA.
A Taxable Account is Always an Option
While not ideal, if you aren’t eligible for a retirement account, anyone can open a taxable investment account. You won’t get the tax break now or on your capital gains, but you’ll grow your money, preparing you for the future.
If you haven’t started saving for retirement, now is the time. Even if you stay-at-home, you have options and should use them. Saving for your own retirement is important, even if you’re married. The more money you have to get you through your golden years the better! Hopefully, you both live a long, prosperous life, enjoying your golden years together in financial peace because you both saved plenty for your retirement funds.