When I was working in the corporate world, I had my retirement contributions automatically withdrawn from my paycheck and deposited into a 401k. After a few years of working and contributing, I quit my job and rolled my 401k into a Roth IRA. I didn’t want to stop planning for retirement just because I no longer held a traditional job. That’s why I want to talk about retirement for the SAHM.
Have you heard of the spousal IRA? They are actually just regular IRAs (Traditional or Roth) opened in the non-working spouse’s name. If you are a WAHM, then you should definitely have an IRA. The beauty of a spousal IRA for non-working SAHMs is that they don’t need earned income. Their spouses can make contributions for them!
The Spousal IRA
– Not a special IRA. It is actually just a Traditional or Roth IRA.
– 2018 and 2019 IRA contribution limits: $5500 and $6000, per person, respectively (if over age 50, $6500 and $7000).
– This is NOT a joint account. The IRA will be opened in the non-working spouse’s name.
– This is a “spousal” IRA, so you must be married and filing your tax return as Married Filing Jointly (MFJ).
– Spousal IRAs do not require the account owner to have earned income. As long as the working spouse has enough earned income, he/she may contribute to the non-working spouse’s account and his/her own account. Total contributions to both IRA accounts cannot exceed earned income.
– The benefits of a spousal IRA for SAHMs include the ability to save for retirement while not earning an income and take advantage of an IRA’s tax benefits.
SAHMs need to plan for retirement, too! The earlier you start putting away money, the sooner your money can start working for you. Put in as little or as much (up to the stated limits) as you can. The most important thing is that you start NOW. The power of compounding is amazing and time is invaluable.
If you are torn between opening a Traditional IRA or a Roth IRA, I’ve written about the differences (and similarities) between the two IRAs. Be sure to check it out!