When you choose to step back from the workforce by staying home either full-time or by taking a part-time job, it can be a lot harder to save for retirement. Most employers don't offer retirement benefits to part-time employees. Without an employer, it's even harder. It takes more planning to make sure that you can save enough to make your retirement comfortable.
IRA
For spouses with what the Internal Revenue Service (IRS) refers to as "unequal compensation," one of the best tools for saving for retirement is a spousal individual retirement account (IRA). Just like other individual retirement accounts, a spousal IRA offers tax advantages. The spousal IRA allows an individual to save up to $5,000 every year, even if you have no income in your own name. If you are over 50, you can save up to $6,000. However, know that there are a few more hoops to jump through for a spousal IRA than for other retirement accounts. You and your spouse need to file your taxes jointly, and contributions to other retirement accounts in your name can limit what you can save.

Karen Carlson, the director of education at InCharge Debt Solutions notes that the spousal IRA can be a great way to catch up: "Significant numbers of middle-aged and boomer generation Americans are just now starting to save for retirement. Exhausting the spousal IRA is a great way for couples to kick retirement savings into high gear and 'catch up' to where they should be at this point in the game."

There are other options for saving for your retirement, including contributing to other types of retirement accounts and saving on your own. It makes sense to sit down with a financial planner to explore the best options for you and your significant other, especially since your choice of saving strategies can have major impacts on your taxes.

Work Together
You do have to work with your spouse to come up with a plan that will work for you, for the long-term. Because there aren't as many automatic triggers that can help you save as if you're the primary breadwinner. There are no retirement account contributions being deducted from the paycheck of a stay-at-home parent. You have to make sure that you're meeting your goals.

Carlson describes building retirement savings as a 'team sport.' "Saving for retirement is not about how much you or your spouse makes, it's about how much you keep. Create a plan together and work the plan. Consistency is everything when it comes to building retirement savings habits. These are not one-time decisions - these are daily decisions that build security for you and your family, over decades. If your goal is to max out the spousal IRA each year, don't think about how you are going to 'find' $5,000 once a year. Allocate $416 each month from your monthly budget to your IRA."

The Bottom Line
It's tempting to think that relying on your spouse's retirement account is enough, provided you put enough money into it. But it is important to make sure that both you and your spouse have separate retirement plans in place. No one wants to think that it can happen to them, but divorces does happen, and they can change your retirement expectation overnight. In most cases, retirement accounts are considered community property in a divorce and should be split, but there are situations in which one spouse may ask the other to waive any claim to retirement benefits. Retirement planning is based on hoping for the best and planning for the worst. Keep that in mind as you and your spouse talk about how to save for both of your futures.

Related Articles
  1. Retirement

    Smart Ways to Tap Your Retirement Portfolio

    A rundown of strategies, from what to liquidate first to how much to withdraw, along with their tax consquences.
  2. Saving and Spending

    What Baby Boomers Need to Know About IRA RMDs

    Mandatory minimum distributions from traditional IRAs and qualified plans cannot be avoided. But there are several ways to minimize their impact.
  3. Your Clients

    How to Construct an Annual Review for Clients

    One of the best things that advisors can provide to clients is an annual review of their financial situation. Here are some guidelines.
  4. Retirement

    Is it Safe for Retirees to Invest in Technology?

    Tech stocks are volatile creatures, but there are ways even risk-adverse retirees can reap rewards from them. Here are some strategies.
  5. Retirement

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
  6. Retirement

    Retirees: How to Survive When Interest Rates Drop

    Low interest rates are a portfolio killer if you're living off of investment income. Some strategies for dealing.
  7. Insurance

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  8. Term

    How Traditional IRAs Work

    A traditional IRA is a tax-advantaged retirement account that includes stocks, bonds, mutual funds and other investments.
  9. Retirement

    5 Reasons Millennials Lead in Saving for Retirement

    Say what you want to about millennials but the one thing they are doing better than any other generation is saving for retirement. Here's why.
  10. Retirement

    Shopping the New Retirement Products

    There are more options than ever for retirement portfolios these days. Choosing the right product comes down to your needs, time and management style.
RELATED FAQS
  1. Am I losing the right to collect spousal Social Security benefits before I collect ...

    The short answer is yes, if you haven't reached age 62 by December 31, 2015. The Bipartisan Budget Act of 2015 disrupted ... Read Full Answer >>
  2. What is the maximum I can receive from my Social Security retirement benefit?

    The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639. However, ... Read Full Answer >>
  3. Are target-date retirement funds good investments?

    The main benefit of target-date retirement funds is convenience. If you really don't want to bother with your retirement ... Read Full Answer >>
  4. Where else can I save for retirement after I max out my Roth IRA?

    With uncertainty about the sustainability of Social Security benefits for future retirees, a lot of responsibility for saving ... Read Full Answer >>
  5. Will quitting your job hurt your 401(k)?

    Quitting a job doesn't have to impact a 401(k) balance negatively. In fact, it may actually help in the long run. When leaving ... Read Full Answer >>
  6. How does my spousal Social Security benefit work?

    If you have never worked or paid Social Security taxes, you will not be eligible to receive Social Security retirement benefits ... Read Full Answer >>
Trading Center