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As a stay-at-home mom, you work hard, perhaps harder than ever before, but you see no financial reward for it. In fact, when you are not in the workforce you lose out on a salary and risk facing retirement with diminished savings. You can take steps to protect yourself financially, whether you are a permanent or temporary stay-at-home mother. But being prepared will take some planning.
Your spouse can help protect you by contributing to a spousal IRA. In general, anyone contributing to an IRA must have earned income; however, that doesn’t apply to a spousal IRA. Your spouse can contribute to both their own and your IRA up to the amount they earn each year. As a married couple filing jointly, you can contribute $12,000 annually to IRAs ($14,000 for those 50 and older). The spousal IRA will be in your name and belong to you.
If you have a retirement account from previous employment, you can roll it over into an IRA. You won’t have to pay any taxes or penalties, and you’ll be in a better position to withdraw money early if necessary. Also, an IRA gives you a better chance of “growing” your money as an investment. Learn more about IRA rollovers and the best online IRAs here.
If you return to the workforce, you can take steps to catch up on your retirement savings. If you have a 401(k), you will need to contribute the maximum allowed each year if possible. If not, put in as much as you can afford. Even 15 years of a concerted savings effort can put you in a decent financial position for retirement.