the stay-at-home parent and divorce
by Alexandra Moore-Wulsin, a Principal at Strata Law Group, PLLC
A decision to stay-at-home and rear children is highly personal. Some couples agree that they want a parent to stay with the children; other couples look at the cost of childcare compared with their earnings and feel that they will lose money by going back to work. Some parents simply are not emotionally ready to return to work with a young child. There is no doubt that this decision has a financial impact which is acutely felt if the marriage fails.
We divorce lawyers see the financial impact of this decision when the stay-at-home parent consults with us at the end of the marriage. That parent has lost the potential wage growth she would have had had she remained in the work force. The wage-earning parent, on the other hand, feels much more secure knowing that she or he will continue to earn a good living. Follow this link to see the economic losses of staying at home: calculator . The stay-at-home parent foregoes wages, and she foregoes the employer retirement savings match during the time she or he does not work. Her staying at home has real economic benefit to the wage-earning spouse. The wage earner benefits by knowing that she or he has child care covered and that the stay-at-home parent networks to further the working parent’s career – all done in the name of furthering the economic health of the family.
A stay-at-home parent need not feel financially paralyzed when faced with divorce. She will have to adapt to a new budget, which likely means returning to work, sometime after the divorce is finalized. When that happens depends upon what assets are awarded, what spousal support, or maintenance, is paid, and what the household budget for the stay-at home spouse is.
As a divorce attorney, in my ideal world, I would advise a parent thinking about staying-at-home have a robust conversation and to consider several steps to create more economic security for each member of the economic unit, with the side benefit of enhancing the likelihood of re-entering the work force if the marriage ends in divorce.
- Discuss your family’s financial plans with your spouse. What is your budget? How much are you able to save each year? How will you title your accounts? Hint, unless there is a good reason not to, you want your name as well as your spouse’s name on all financial accounts that can be titled jointly. Have this conversation often.
- Can you keep your budget trim enough to be able to contribute to a spousal IRA in the name of the stay-at-home spouse? There is a huge sense of security knowing that there are retirement accounts in one’s name.
- Who is the beneficiary designated on the working parent’s retirement accounts? Is there any reason why it should not be the stay-at-home spouse?
- What can the stay-at-home spouse do to keep-up her skill set and her network? The simple act of staying in touch with former co-workers and bosses and of keeping up one’s skill set may open an important door if the marriage ends in divorce. Volunteering too builds networks and allows the stay-at-home parent to develop new skill sets.
Stay-at-home parents, husbands or wives, do return to the workforce after a divorce. Re-entry will be easier if networks are maintained. The divorce process will feel less stressful in the stay-at-home spouse has continued to save towards retirement and has her name on all financial accounts. These simple steps should reduce the financial paralysis when the stay-at-home parent faces a divorce.