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News Release

Switching to the 24-Hour Workday: Financial Implications of Stay-at-Home Parenting

August 19, 2014

Choosing to transition from two incomes to stay-at-home parenting isn’t an easy decision, but is the right choice for many families. This decision should be made after careful consideration of the financial implications of leaving the workforce. While dropping expenses such as daycare, commuting and lunches helps, leaving a job means losing out on financial benefits that most parents don’t notice until they’ve already left their job.

Certified Financial Planner Board of Standards (CFP Board) Consumer Advocate Eleanor Blayney, CFP® shares her tips for families considering becoming single-income households on

“The total cost of leaving a job to become a stay-at-home parent isn’t simply a tally of hard costs paid for by check or credit card, like the costs of professional attire or a subway pass,” said Blayney. “Many people don’t consider the foregone benefits, which are easy to ignore when making this decision, because they are hard to quantify.”  

Blayney shares under-the-radar costs and benefits parents leaving the workforce may not be taking into account, to help them navigate this transition in a planned and financially responsible way:

  • Retirement contributions: Giving up employment means giving up the free, tax-deferred benefit of a retirement plan employer match.  It’s important that stay-at-home parents still fund their retirement via IRAs or with after-tax savings, but the amounts they can put aside are often less due to a tighter budget or IRS limitations.

  • Non-taxable or pretax tax benefits: Some employers reimburse employees for tuition expenses, and these reimbursements are not considered taxable income.  Similarly, workplace cafeteria plans allow for savings on certain expenses – such as eye care or dental – with pretax dollars. Leaving an employer means foregoing these benefits.                                                                                                                        
  • Social Security benefits:  Retirement benefits are calculated on the highest-paid 35 years of employment, and no credit is given to full-time parents. Time out of the workplace can mean receiving lower Social Security benefits. 

  • Insurance:  Leaving an employer may mean losing term life insurance benefits, health insurance benefits, and certain forms of disability insurance that are not available to those without workplace earnings. 

  • Future employability: A prolonged departure from the workplace makes rejoining the workforce at a later date harder, especially at an income or responsibility level comparable to that of a previous job. The amount of foregone future income and employment benefits can be considerable.

“As a CFP® professional, it is not my job to impose my opinions or choices on clients – they should do what’s best for their families, whether that’s two working parents or stay-at-home parenting,” says Blayney. “But talking with a CFP® professional will help families evaluate their goals, and get them to think about how the costs they may not be considering will affect their ability to reach those goals.”