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Old 02-22-2021, 11:40 AM
 
2,206 posts, read 1,349,319 times
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Quote:
Originally Posted by gingertea View Post
If being a one-income family is in your plan, I have a few suggestions:
  • Put her in charge of the household finances and carefully plan out your budget.
  • Contribute to an IRA in her name only.
  • Update your insurance policies (add disability insurance if you don't already have it), wills, advance health care directives, and durable powers of attorney.
Can you explain how the IRA thing is helpful?
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Old 02-22-2021, 12:19 PM
 
Location: Coastal Georgia
41,347 posts, read 51,182,325 times
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Quote:
Originally Posted by gingertea View Post
If being a one-income family is in your plan, I have a few suggestions:
  • Put her in charge of the household finances and carefully plan out your budget.
  • Contribute to an IRA in her name only.
  • Update your insurance policies (add disability insurance if you don't already have it), wills, advance health care directives, and durable powers of attorney.
IRAs are only issued to one person...INDIVIDUAL Retirement Account, and you can only invest EARNED income, so I assume you mean to max out her spousal IRA amount.
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Old 02-22-2021, 01:12 PM
 
Location: Bloomington IN
7,465 posts, read 9,277,539 times
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Quote:
Originally Posted by wac_432 View Post
Can you explain how the IRA thing is helpful?
Often when one is an employee an employer will match contributions to an IRA or may have some form of a pension plan. When one stops working those contributions end, but the now non-employed spouse should ideally still be contributing to some sort of retirement savings. They will have to do that independently of an employer.
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Old 02-22-2021, 01:41 PM
 
685 posts, read 730,199 times
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A big question is does she want to return to work after a certain period of time at home with child/ren? The job market can already be an unforgiving environment for older women, do not underestimate how hard it might be for her to get back into the workforce at her age after a break of even 2-3 years. You can lose your currency very quickly once you stop working. (Obviously, that will vary for each individual, depending on what work they do)

I had my first child at 39 and second just before 43. When our first child was 6 months old, I returned to work for 18 months while my husband was the at-home caregiver, then I stopped and he started working again. Since then, I have only done sporadic contract work, and not even that for the last 5-6 years. Overall, I don't regret being a SAHP, I was ready to shift focus, and it worked out to be the best option for me, our kids and my husband, but there are definitely still times when I grieve for the loss of my professional life, not really for the money but for my sense of self.

Also, even with a strong relationship, it can still feel very precarious to know that you are largely dependent long-term on someone else's income because your own earning ability is greatly reduced (I suspect that's the reason behind the IRA and insurance suggestions). And it's also hard on the sole income earner, knowing everyone else is depending on them financially.

Good luck, OP, there are no straightforward answers. And congratulations!
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Old 02-22-2021, 02:20 PM
 
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Quote:
Originally Posted by gingertea View Post
It's helpful for the same reason the OP contributes to his own retirement accounts.
Then why bother dividing the accounts?
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Old 02-22-2021, 03:40 PM
 
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Quote:
Originally Posted by gingertea View Post
You don't have to divide them. You can contribute the full amount to both as long as you meet the eligibility requirements. That means he can contribute $19,500 to a 401k, and she, using his income, can contribute $6500 to a spousal IRA. It's a method for putting more money back for retirement and taking advantage of the tax benefits while she takes a break from paid employment. If you can afford it, it's a very wise thing to do because it reduces your adjusted gross income at tax time.
Thanks. I see. We need more of our our assets liquid for our future business plans, so we don't max out my retirement contributions.

I wasn't thinking about maxing out retirement accounts and being able to increase the max contributions. Good reminder/explanation.
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Old 02-22-2021, 07:07 PM
 
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Quote:
Originally Posted by gentlearts View Post
Besides the cost of daycare, you’d save on gas, clothing and lunches. It would probably almost be a wash.
There is such peace of mind in knowing that someone is at home taking care of business. Mom is there when the kids are sick. Mom is there to supervise and keep the home running smoothly.

Of course, OPs wife is just trading a 9-5 job for a 24/7 job, so she has to want to.
Alterative is that 24/7 job waiting for her when she comes home from the 9-5. Choose wisely.
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Old 02-22-2021, 07:12 PM
 
10,193 posts, read 6,274,296 times
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Quote:
Originally Posted by ddm2k View Post
Alterative is that 24/7 job waiting for her when she comes home from the 9-5. Choose wisely.
Yes, anyone considering having kids who thinks that their job will be 9-5 shouldn't have kids. You will not be working just 9-5 for the next couple of decades, whether you have a job outside the home or not.

I'm firmly on the side that says having a parent who is home even part-time to get things done during the weekdays will greatly reduce everyone's stress and exhaustion.
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Old 02-22-2021, 07:31 PM
 
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Thank you very much everyone. Truly appreciate the advice and things to consider.
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Old 02-22-2021, 08:17 PM
 
Location: Central IL
18,091 posts, read 11,206,906 times
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Quote:
Originally Posted by Mstrlucky74 View Post
We are doing a deep dive on our financial situation right now. Probably need to talk to financial advisor.
In a nutshell

$750k in our retirement accounts
Own two homes one worth $400k and the other $500k. Both about 50% paid off.
All other debt around $55k
I’m 46 yikes
She’s 41.
Late start having kids but my wife had lukemia which put things on hold for quite a while.

Good thing is my union benefits will cover my children up to 26 if in school even if I’m retired
I’d really like to retire at about 63.
Uhm....by golly if you guys can't afford it who can? But do keep in mind that it's not just losing her income NOW. It's also lower SS benefits for her, likely less retirement investments she would have made for herself, much tougher time getting as well a paying position after taking 10 years (minimum) out of workforce to raise kids to the age of elementary school.

And yes, you're both getting older, but I guess you know that. Like it or not, most people top out their income (except for inflation) and promotions in late 40's early 50's so you may not be able to count on many big increases from here on out.
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