If you are part of the 18% of parents working as a stay-at-home spouse, you may think there are no options for you to save for retirement. This common misconception can negatively impact the family and can contribute to the possibility of running out of money before the end of your life. As a stay-at-home parent, the value and contribution you bring daily to your family are undeniable. This can help ensure that once you hit retirement age you will still have income sources and a variety of options.
Option 1. Social Security Benefits.
Working as a stay-at-home parent is a full-time job and you are still able to receive Social Security benefits like other workers. There are a few ways to qualify.
If you have worked 40 quarters or 10 years and earned a minimum of $1,300 per quarter, you will qualify for a full Social Security benefit.
It is important to consider your options. Depending on how much benefit you can receive, it may make more sense to consider a spousal benefit.
If you are married with little to no earnings of your own you can receive a benefit equal to half of your spouses Social Security benefit at their full retirement age (Typically 66 or 67 years old)
Keep in mind that you must wait until at least the age of 62 to apply and if you apply before your full retirement age your benefit will be reduced.
Option 2: An IRA
Another option for stay-at-home parents who have little to no earnings is an IRA. Normally, you must be earning at least as much as you are contributing to your IRA. Spousal IRAs change this. If you are married, file a joint federal income tax return, and earn less than your spouse, then you can contribute to your own IRA. This is because the IRA is not based on your income alone but on the combined compensation of you and your spouse.
Remember the amount that you can contribute will depend on your annual contribution limits. If your spouse is also contributing to a separate IRA then the combined compensation must be at least equal to the combined contributions.
The most important thing to remember is that you have options. Being a stay-at-home spouse can be as exhausting as it is rewarding. It can be easy to forget about your financial future. These options can help empower you to save for a happy retirement.
If you have any questions about planning for your future and retirement income options call Jay Blanchard 716-568-8568 TODAY!