As every stay-at-home parent knows, what you're doing is work. Real work. But for stay-at-home-moms and parents who have stepped back from the traditional workforce (whether temporarily, involuntarily or by choice) saving for retirement can feel like a challenge. How do you plan for retirement when you're not bringing in a paycheck?

The good news is, just because you're not getting a 401(k) match from a company right now doesn't mean you need to give up on planning for the future. We spoke with Lorna Kapusta, Head of Women Investors at Fidelity Investments and Brittney Castro, CFP of Mint and founder of Los Angeles-based financial planning firm Financially Wise, about how to save for retirement as a SAHM, even if you haven't started yet.

If I'm a SAHM and I haven't started saving for retirement yet, where's the best place to start?

Don't panic: While retirement is a huge goal to save and invest toward—and the earlier you start, the better—you can start saving at any time. "It's never too early—or late—to get started," says Kapusta.

A good first step is to open a spousal IRA. If you are married and not working, Castro recommends starting to save for retirement by opening up a spousal IRA. "The spousal IRA allows you to contribute without an income—this is very smart for stay at home moms to ensure they too are saving for their retirement." Consider consulting a financial planner to determine whether a traditional or Roth spousal IRA is best for your situation, based on your income level and retirement goals.

However you decide to save for your future, don't put it off too long. It's important for women to have a plan for retirement, as Kapusta notes, even if they're planning on staying at home: "Something to keep in mind: on average, women tend to live longer than men. That means we generally need more money in retirement, and we need it to last longer. So if you haven't already, make time to create a financial plan for the long term."


Do I need to have a separate retirement plan or account from my spouse?

Yes. "It is always smart to have your own retirement account, regardless of your marital status or working status," advises Castro. Workplace retirement accounts, such as a 401(k) or an IRA, are held in one person's name only (although spouses can be named as beneficiaries on each other's accounts), so you and your spouse should each have your own.

As Kapusta notes, however, "when it comes to marriage and finances, there isn't a one-size fits all approach." The most important thing is to communicate about how your money is managed and how you want to grow it for the future. "Whether you hold accounts together or separately, planning together is crucial for achieving long-term success."

Consider working with a financial advisor to weigh the pros and cons of saving for retirement jointly. While it may be the last thing on your mind right now, it's important to consider what might happen in the event of divorce or an end to the partnership. "When married couples divorce, part of the divorce settlement often involves splitting retirement accounts," Kapusta says. "Unmarried couples have no legal mechanism to help ensure an equitable split. It may be important for each person in the relationship to save for retirement on their own."


What's a good monthly goal for retirement savings?

While the best answer to this question depends on a few factors including your current age, your tolerance for risk and your retirement goals (like when and where you want to retire, and what age you'd like to retire), the financial experts we spoke to recommended saving 10% to 15% of your family's annual income toward retirement. So, if you and your partner are currently living on $63,000 per year (currently the average household income in the United States), together you would aim to save $6,300 to $9,450 per year toward retirement.

"That may seem like an insurmountable goal," Castro acknowledges, "but starting small by saving even 1% to 3% of your partner's salary can make a big difference in the future." Kapusta agrees, noting that even small savings will compound interest and grow faster than no savings at all: "Start with what makes sense for your individual situation. Even small contributions will start adding up over time. But make a commitment to increase the percentage you save at regular intervals—even if just by 1% at a time—to reach that 15% goal."

One big step toward hitting your goal retirement savings each year is to make sure your partner takes full advantage of any matching contributions that their employer may offer in their retirement plan—more on this below.


We recently went from two incomes to one. How does this impact our retirement planning?

The COVID-19 pandemic is having a significant economic impact on families—many parents are facing job losses, rising expenses, childcare shortages and the pressure to leave the workforce to manage childcare and virtual school. It's never been more important for families to take control of their finances.

"For those stepping out of the workforce—either by choice, or because they've been impacted by the economy, it's important to revisit retirement planning," Kapusta notes.

Here are steps for the earning partner to take that can help ensure long-term financial stability for the entire family if you've transitioned from two incomes to one :

  • Maximize your employer retirement benefits. For the spouse who is employed, take full advantage of any retirement benefits offered by your employer. "Make sure you are taking advantage of the entire match they offer, as this is basically free money," Kapusta says. "If, for example, they offer to match contributions up to 6%, I would try hard to work towards contributing at least 6%," Kapusta suggests.
  • Make it automated. "One of the easiest ways to make saving for retirement a regular habit is to set up automatic contributions. We recommend that you set up automated contributions to your retirement accounts that are timed with your paycheck, so you never even have to think about it," says Kapusta.

Is it more important to pay down debt, save for an emergency fund or save for retirement?

It depends. "If you have no emergency fund, then yes, start with building up at least a few months of your committed expenses in some sort of high yield savings account," says Castro. "We don't know what life is going to throw at us and having a cushion can help you navigate the uncertain times."

Kapusta recommends the "50/15/5" rule as a guideline: "Meaning, 50% of your income should cover essentials (i.e. rent); 15% is what you should aim to save toward retirement; and 5% goes toward short-term savings goal (such as the all-important emergency fund). The remaining 30% is for discretionary expenses."

While for many families the pandemic has demonstrated the importance of having an emergency fund, the truth is that saving money when you are already in debt or strapped for cash can seem like a distant goal. "You don't have to start with this large goal if you're in debt or have other money troubles," Kapusta acknowledges, "however, you should prioritize emergency savings as much as you can even over aggressive debt repayment ." Pay yourself first.

Castro agrees, suggesting that in the long term, saving money isn't about having a stash of cash to deal with unexpected bad news like medical bills or car repairs—or a pandemic. It's about building your own future. "Having savings gives you the freedom and security to deal with whatever life brings your way—good or bad."