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Can a stay at home mom get Social Security?

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experian.com - 5 Costs of Being a Stay-at-Home Parent - Experian

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When deciding whether one parent should stay home with the kids instead of working, most families consider reduced household income first. But the true costs amount to more than just lost paychecks, and may include the loss of opportunities a second income affords. At the same time, stay-at-home parenting can help families save big on child care and other expenses. How the math works out on opportunity costs vs. savings may be the deciding factor about one parent working. Here's what you should know.

5 Opportunity Costs of Staying Home With Your Kids

Opportunity costs are losses associated with choosing one alternative over another—in this case, choosing to stay at home with your children rather than work. Your family must consider the direct costs as well as the opportunity costs of having one parent stay home, including:

1. Salary

The loss of a salary is the most immediate cost when a parent exits the workforce to care for children. But even when it may make financial sense for one parent to stay home because child care costs meet or exceed their income, it can be an adjustment for a household to go from two incomes to one. Before making the switch to having one stay-at-home parent based solely on child care costs, families must ask:

Can the remaining income comfortably cover bills?

Do we have enough in emergency savings?

How would one parent exiting the job market impact health care costs?

Setting up a budget for the family can be a good way to track expenses and determine whether you'll be able to keep up with your bills and other financial obligations with only one parent bringing in a salary.

2. Retirement Savings

While it's hard to put an exact price tag on the loss of retirement savings for stay-at-home parents, Fidelity data shows these losses can be significant. According to the brokerage firm, a parent making $50,000 a year who takes a year off work could reduce their retirement savings by as much as $106,469. If you can afford it, a spousal IRA may be a good way to combat some of these losses. As long as one spouse is earning income, you can stash some away in a spousal IRA and maximize your account limits for retirement savings.

3. Social Security Income

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Stay-at-home parents may also miss an opportunity to increase their Social Security income. This is because Social Security benefits are based on a formula that looks at averaged income over 35 years of working. So any lost income could lower your potential Social Security income once you reach retirement age. When stay-at-home parents retire, however, they may be entitled to a Social Security spousal benefit. They will receive Social Security income based on their spouse's earned income, up to half of the working spouse's Social Security income amount. This may be enough to make sure stay-at-home parents can still retire comfortably.

4. Career Development

This loss can be hard to quantify, but career development can be a high price to pay for stay-at-home parents with definite plans to return to the workforce. From missing on-the-job experience and losing out on continuing education to going without certification training, time away from a career may not be easily recouped. Lost time in fast-moving, technology-driven roles may also be difficult to bounce back from. That's why stay-at-home parents may want to pursue relevant certifications or consider working part time to stay on top of new industry developments.

5.Yearly Raises and Tenure

Lost advancement at a particular company can have wide-ranging effects even after a stay-at-home parent returns to the workforce. Though they may be able to find a place back at their previous company, they may have missed out on things such as promotions, seniority increases (which can affect being granted time off or accrued paid leave), merit raises and yearly cost of living raises. Unfortunately, it's also not uncommon for returning workers to be paid less altogether, which in turn affects other earning potential such as retirement savings growth and Social Security income.

experian.com - 5 Costs of Being a Stay-at-Home Parent - Experian

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