Do you need to save more money if you have a stay at home parent (SAHP)?  No.  If you use the 15% savings for retirement rule, it doesn’t matter if you make $50k or $100k.  15% is based on what you make.

Yes you will have more saved if two parents work in the household.  But you also have more expenses because you are used to living on two salaries.  Before people claim they save more with dual couples, the only way you save more is if you can save 100% of the entire 2nd salary.  Otherwise you might not be as far ahead as a couple who saves on one salary.  Because percentages are what really make a difference.  So a couple saving 25% of one income (but it’s only $20k) versus a couple saving 10% of $150k joint ($15k) which is saving more?  And which couple is used to living on less?

So retirement savings for the stay at home parents is not lost if you are saving 15% of gross salary. I know many dual income couples who can’t save 15% of a dual income.  So how do they expect to retire if they are using up every penny of both incomes?  If they are able to save the entire second income, then they come out ahead.  But that’s if they can afford a mortgage, daycare, and all expenses on one income.  Using any portion of the second income and you really need to see what you are saving.

One consideration is divorce.  Yep a stay at home parent can definitely get screwed if they get divorced.  But does being a stay at home parent make it more or less likely, I am unsure.  If there is no correlation then they have as much chance as someone working. And the working parent will not get alimony or support to potentially retool. They might be forced to work at a job they hate for little money because they were working before the divorce.

A second consideration is that a family making $50k with one bread winner versus $100k with dual income parents will likely get social security.  I’m not saying this is appropriate, but likely in 30 years SS will be means based.  And a family which earned less will likely qualify for SS payments.  A family who earned more will likely be phased out and expected to have saved their own.  We fall into this category so I never count on SS replacing any portion of our income.  But for some people they will need to save less because a portion of their income will be replaced by SS.

So a couple with a SAHP might not be in as bad shape for retirement as some people suppse.  Especially since people’s retirement have shifted from pensions to cash balanced plans.  Before and currently widows would live poorly when their husbands died and the pensions they were receiving went away.  But now because so few people have pensions that replace any substantial amount of income, it’s solely based on the people’s savings habits.  Thus those widows whose husbands die will be able to live off savings, not counting on a pension.

So do you think SAHP need to save more money for retirement?  Or it doesn’t matter as long as you save period?