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Tim's job as a personal trainer demanded that he meet with clients early in the morning, at night and on weekends. Jennifer's demanding job as a lawyer also meant lots of stress and an unpredictable workload. The couple intentionally chose to have three children close in age because they shared the dream of building a close-knit family full of love and laughter. But when they took a step back to consider the reality of their lives as two working parents, they felt their values had somehow gotten buried. They were spending more time at work than with their young children.
Even worse, they spent more money on childcare than seemed logical, based on Tim's income. Once they crunched the s, Tim and Jennifer realized that, with careful budgeting, they could afford for Tim to stay at home with their three young children. Relieved that they were in a financial position to deate Tim as the stay-at-home parent, they had only one major concern: How could they continue to build on the retirement savings momentum they'd established in their early 20s, to achieve their dream of retiring by the time they were 60 years old? The decision to become a stay-at-home parent means a of changes to family dynamics and shared finances — but it doesn't have to hinder either spouse's retirement goals.
Plus, that contribution may present some additional tax advantages. Here are some opportunities that families like Tim and Jennifer's should consider as part of a retirement and tax planning strategy when one parent stays at home to help raise the.
Wanted stayathome mom for ltr you meet these basic qualifiers, the next step is to explore which types of retirement contributions will best support your retirement savings goals. Although annual retirement contributions can help savers build the retirement savings balance they need to feel prepared for retirement, not all retirement contributions yield tax benefits. Whether they will or not depends on a of factors, including the type of retirement plan the working spouse may be eligible to participate in through an employer or self-employment, and the couple's MAGI. To make sense of the IRS rules around retirement saving opportunities for stay-at-home parents, consider how Tim and Jennifer could be impacted, based on the following scenarios:.
In turn, she benefits from lowered taxable income. If your family includes a stay-at-home parent, don't forgo retirement contributions just because you don't get a paycheck. If you need to open an IRA for this purpose, give yourself several weeks to choose a provider, complete the Wanted stayathome mom for ltr and get it funded so you don't miss out.
Note that income limits, IRA contribution limits and k plan contribution limits are for and are indexed for inflation. Please consult your tax and legal advisors for advice pertaining to your particular circumstances. Stephanie Taylor Christensen is a former financial services marketer turned freelance writer with more than a decade of experience writing about personal finance and business topics for financial institutions, private firms and the national media.
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Oct 16, 5 min read Stephanie Taylor Christensen CG-Article all,ctg-family-finances,cnt-stay-at-home-parent-tax-tips,article,investing strategy,retirement,planning for retirement,retention,eg-evergreen Family Finances. Key Takeaways Stay-at-home parents can fund IRAs if their spouse works and the couple files taxes tly. Such retirement savings may be tax deductible, depending on your MAGI.
Calculate how much and how each of you can save Although annual retirement contributions can help savers build the retirement savings balance they need to feel prepared for retirement, not all retirement contributions yield tax benefits. To make sense of the IRS rules around retirement saving opportunities for stay-at-home parents, consider how Tim and Jennifer could be impacted, based on the following scenarios: 1.
What you can do next If your family includes a stay-at-home parent, don't forgo retirement contributions just because you don't get a paycheck. For Compliance Use Only: View More. If you secure tomorrow, you can enjoy today. Get a Free Quote. Find What Interests You.
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Retirement and Tax Planning Strategy for Stay-at-Home Parents