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Smart financial moves for stay-at-home parents

A stay-at-home parent faces unique financial concerns when it comes to retirement planning. Here’s a guide for staying on track.

Money management for SAHMs

Being a stay at home parent comes with unique challenges — or, as the Instagram memes make clear, all the challenges. You’re the family childcare provider, household manager, and you may also be in charge of the household budget. Within that budget lies a key component: your own financial welfare. Are you looking out for your future self?

Whether you’ve made the decision to stay at home indefinitely, stay at home for a few months or years, or you’ve had the stay at home parent label foisted on you due to job restructuring, there are a few financial moves you should think about, for the sake of your financial health now and in the future.

Talk about money with your partner

Even if one partner isn’t earning an income, it’s always a great idea to have honest conversations about money, including how it’s being saved and invested. Every couple is different, but some couples experience a shift in financial responsibilities when one partner earns the majority of the household money. Talking about retirement goals, including a “what if” conversation about the possibility that one partner could die, can help put you both on the same financial page. It can also be a smart strategy to make sure you’ve considered both your short-term and long-term financial plans, and in alignment on short- and long-term goals. For example, maybe one partner takes over the day-to-day budgeting while the other focuses on investments. If you both have a working knowledge of all of your financials you might avoid financial surprises down the road.

Consider life insurance

Yes, life insurance is our business, so of course, we’re going to suggest that you consider purchasing a policy. But it’s also true that stay at home parents, like working parents, can find that a life insurance policy offers tremendous peace of mind. If you were to die, how would your partner be able to work and cover childcare and household administration? He or she would likely need to outsource, which could be expensive. A life insurance policy can be one way to help you continue to provide for your family and their needs, as well as leave a legacy, even after you’re gone. A personal life insurance policy is independent of your current job status, and if you do end up going back to the workforce, any group life insurance policy offered in your benefits package would be additional.

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Consider your options

If you still earn some income throughout the year, you can contribute to a traditional IRA, up to annual limits based on your tax filing status, using pre-tax dollars. You’ll pay income taxes on future withdrawals. If you open a Roth IRA, you can contribute with post-tax dollars, but you won’t be taxed later on. Another option is a spousal IRA, where you may be able to contribute to an IRA even if you have no taxable income for the year, as long as you file taxes jointly with your spouse.

If you had a 401(k) at your last job, you might want to make a decision about what you want to do with it. Typically, you’d have four options available to you, or a combination of those options:

  • Leave the money in your former employer’s plan, if permitted;
  • Roll over the assets to your new employer’s plan, if there is one available and it’s permitted;
  • Roll over to an IRA; or
  • Cash out the account value.

Some accounts have to be closed after you separate from your employer. In that case, if you move the funds directly to another qualifying retirement account you can avoid the taxes and penalties that generally accompany early withdrawals. If you choose to cash out, early withdrawal penalties will apply if you’re under age 59 ½, in addition to ordinary income tax.

There are pros and cons to each choice. You’ll want to compare the differences between your old plan and any new plan you may be considering, such as different investment options, fees and expenses, withdrawal options and tax treatment. These will probably influence your decision. A CERTIFIED FINANCIAL PLANNER™ professional or financial advisor can help you make the best decision for you based on your financial needs and retirement plans. Many banks and credit unions offer free retirement planning guidance so you might want to start where you have your checking account.

Be aware of the “retirement gender gap”

MassMutual, the parent company of Haven Life, recently completed a study that found that women and men not only approach retirement differently, but they have different retirement needs. For example, women tend to live longer than men, which may mean their retirement funds need to stretch farther. Social Security payouts can also be something to consider — your benefit will be based on your lifetime earnings. The fewer years you spend in the workforce, the lower your lifetime earnings might be, and the lower your Social Security disbursements in turn.

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Have a plan for financial windfalls

While you may not be getting a regular paycheck, you may have a side hustle, or you may be a beneficiary to a life insurance policy or inheritance. Having a plan for what you might do with both big and small financial gains can be helpful. For example, you may wish to have an independent account that you maintain control of, or you may earmark any money you earn as money that goes into an emergency savings fund or a college savings plan. Having some sort of financial strategy — which can be flexible — can help you easily make financial choices as they come up.

Reassess your financial plans as needed

Every couple is different, and many stay-at-home parents find prowess in being the one to handle large and small household financial decisions, even if they aren’t bringing home a steady paycheck. Other couples find that it’s easier to have the working spouse handle everyday money decisions. Regardless of where you and your partner may fall on the money-management spectrum, create a to-do list that includes checking in on major financial topics at least every few months or whenever there’s a major financial shift (bonus, inheritance, school tuition, unexpected medical bills).

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Anna Davies is an editor at Haven Life. She has written for The New York Times, New York Magazine, Refinery29, Glamour, Elle, and others, and has published 13 young adult novels. She lives in Jersey City, NJ, with her family and loves traveling, running, and trying to find the best cold brew coffee in town.

Haven Life Insurance Agency offers this as educational information. Haven Life does not offer investment or tax advice and encourages you to seek advice from your own legal counsel, investment advisor, or tax professional.

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About Anna Davies

Anna Davies is an innovative copywriter, magazine editor, award-winning essayist. She has written for The New York Times, New York Magazine, Refinery29, Glamour, Elle, and others, and has published 13 young adult novels. She lives in Jersey City, NJ, with her family and loves traveling, running, and trying to find the best cold brew coffee in town.

Read more by Anna Davies

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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