Are you in a marriage with a stay at home spouse? If so there are things that you can do now that will aid you when it is time to retire later. It is hard enough to plan for your retirement years when both spouses have incomes and retire as in theory you both will have higher social security benefits and I am hoping you both have 401(k) accounts from your employment. But in the event one spouse has stayed home for any number of reasons that does not mean you cannot make adjustments and plan accordingly.
The government has placed a fairly high value on stay at home spouses and that is seen with a spousal social security payment of up to 50% of the wage earning spouse. This amount will vary depending on how much the working spouse made and at what age the two of you start taking your social security benefits. The longer you delay them the more your benefits will be.
But as we all know social security will not meet all of your retirement needs so you need to establish an IRA for the stay at home spouse. There is a rule that allows spousal IRA’s regardless of if the spouse has any earned income. But you need to make sure that the working spouse makes enough money that you can afford to have the IRA. Also if there is a retirement plan at the working spouse’s employment there may be limits as to what portion of the IRA contributions will or could be deductible. And if you meet the guideline a ROTH IRA is the best option to let the savings grow tax deferred and the withdrawals are also tax free as the contributions were tax prior to going into the IRA.
If you are a self-employed individual your spouse may be eligible for retirement plans afforded to self-employed individuals. If your non-working spouse helps you around your home business why not pay them a salary that is appropriate for the work they do and make them an employee of your home business. This will maximize income in a tax sheltered investment and you can avoid current taxation on that income.
And if you have assets that are all in one spouses name under current IRS tax code you are allowed unlimited gifts to your spouse. Those gifts can be in the form of cash, stocks or anything of value. You may also have assets as joint tenancy where ownership will pass to those named in the event of one of your deaths. But in the event of an IRA or 401(k) only one beneficiary can be named so it will usually go to the spouse of the working partner.
Just like married couples who both work there are tools that can make it easier for couples where one spouse stays at home. It is not impossible to have a comfortable retirement but you need to start planning now. Just as with anyone retiring it is never too early to start your planning.
