Can a Stay-at-Home Mom Save for Retirement?

Short answer: Yes, and she should. But finances can be a touchy subject even in a happy marriage.

Motley Fool Staff
Motley Fool Staff
Jul 2, 2019 at 9:11AM
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It would be hard to find a podcast-hosting duo more fully invested in answering your financial questions than Alison Southwick and Robert Brokamp -- they even put "Answers" in their show's name! This week, they're at it again, combing through the Motley Fool Answers mailbag in search of conundrums to address for their listeners. But because three heads are better than two, for this episode, they have recruited senior analyst Ron Gross to help out.

In this segment, the trio offer an array of advice to Ray, who's concerned that he is his wife's sole "retirement plan." More difficult is that she has strong negative reactions when he brings up the subject of them working on changing that together.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on June 25, 2019.

Alison Southwick: The next question comes from Ray. "My wife and I have been married for five years and are expecting our first child later this year." Aw! Yay! "She's 38 with no job and no savings. I'm her retirement plan. I'm 37. I contribute to the thrift savings plan and have three years to go until I'm eligible for my pension. I have two additional brokerage accounts as I pick socks as a hobby."

Robert Brokamp: I think he meant stocks, but you never know.

Southwick: I love that idea! I just like to spend my time pointing at socks. I choose you!

Brokamp: I do have a 401(k) where someone holds Babe Ruth's bat in the account.

Southwick: Oh, really?


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Brokamp: I don't know. Maybe he has a collection of really valuable, famous socks.

Southwick: We used to joke about starting "Sock Advisor," right? Wasn't that a joke around the office? We're going to start Sock Advisor.

Ron Gross: I'm sure it was!

Brokamp: A perfect April Fool's joke!

Southwick: Sorry! Probably Ray likes to pick stocks as a hobby and not socks, but we like both ideas. "I would really like for both of us to be working toward a retirement plan together, but whenever I mention money she gets upset. Here is a direct quote from her: 'Why are you always trying to get me to get a job?' Another common line from her is, 'Do you ask your mother to work?' My mother is 70-plus and retired. Can you help me understand her and/or help me convince her to see the need for income both now and later in life?"

Brokamp: Boy, this is a tricky one!

Gross: Wow! You need a marriage counselor, not a personal finance...

Brokamp: We're getting there. We're getting there! First of all, congrats on the new baby!

Gross: Yes, for sure!

Brokamp: That's great news. There is a somewhat objective right answer to this and that is how much you should be saving for retirement to meet your goals. One possibility is to get a fee-only financial advisor to sit down and say when you want to retire or this is how much you want to save for your kids' college educations. Also, is your wife going to stay home with the kids? What are the consequences of that or what's the cost of day care? To look at all those and [decide that] you are saving enough or you are not. Start there!

That said, it may not be enough because there's clearly a little bit of tension here. So yes, a marriage counselor is probably a good idea. I've mentioned before the Financial Therapy Association. I went to their annual meeting last month. You can go to the website of the Financial Therapy Association, put in your zip code, and it will tell you whether there's a financial therapist in that area. A lot of them have experience in couples counseling to begin with if they started their career that way.

But I think you are going to have to work this out. It might be that she just doesn't want to work and she wants to stay home and take care of the kids, which is a very difficult thing to do and a very noble thing to do. If you're going to get a pension and you're contributing to the TSP you may be financially OK.

Southwick: My armchair therapist advice is that usually when people respond with anger and exclamation points, they're coming from a place of fear. And when she's asking if you want her to get a job and she's angry, she may think you think she's lazy -- and it sounds like maybe you do. But maybe she's just scared of getting back out there and getting a job. Finding something that she loves to do. Maybe it's a matter of, "Is there something you want to do? What would make you excited to go to work every day?"

That's fulfilling! We just talked about that with the expert from AARP. And again, raising kids is so hard and that is a job. That is absolutely a job. But having work outside the house can be fulfilling and exciting, too, if you find the right thing.

Gross: For sure!

Southwick: That's my advice, which is to maybe see if she's scared, and if she's responding from that.

Brokamp: That's great advice!

Gross: That is good advice! I like it!

Southwick: Hey, thanks!

Brokamp: It is. No, it's very valuable advice! One other thing that I forgot to mention was that she actually can start saving for her retirement, because if you are married and you are earning an income, the spouse can open an IRA. It's called a spousal IRA. That way you can start building up a retirement account for her.

I would also say to her she should know that if the unfortunate happens, and you get divorced, there are plenty of studies that have shown that it's harder on someone who is a stay-at-home spouse. Who has not built up their own savings, and not built up their own credit score, and not built up their own job skills. So it might be something she wants to think about in terms of...

Southwick: Maybe he frames it, "If I die..." rather than getting a divorce.

Brokamp: There you go! That's a much better one!

Southwick: It may be a better way to frame it.

Gross: You don't need your own earned income to contribute to a spousal IRA? Is that the benefit of it?

Brokamp: Yes.

Gross: Oh, interesting!

Brokamp: It's about the only example where you can have money put into an IRA for you where you're not actually earning the money.

Gross: $5,500, too? The same amount?

Brokamp: $6,000. It went up this year.

Gross: Wow!