Planning for retirement in a one income family
Yeah, I imagine it would go the same way here, but we live a very frugal lifestyle. Our strength is that we're doing this together. If we were to split our assets down the middle later on, it certainly wouldn't stretch as far.... And my earning potential is pretty low. I would be working for the rest of my life just to make ends meet. I'd been thinking about it this morning and started to feel uncomfortable. There's so much trust involved!
I know I wouldn't feel comfortable but not so much because of the what if's but because dh's salary will never increase to where we can live comfortably before or after retirement. I am going back to school to further my own career but staying home for the next couple of years. Ds will be 4 by the time I hopefully get accepted to graduate school. I'll be doing a little bit of night school this next year.
I know I have 3 sisters who all SAHM (although one has been working pt WAHM). I don't know if they worry about it, their dh's do make a fairly good income and have a belief/religious system that usually doesn't look highly on divorce. Although my one sister has always struggled financially and still kind of is. I do worry about her if anything happened to her dh....even if something doesn't they are financially tight!
One of my aunts started working very part time nearing "their" retirement (She had always SAHM'd) just so they could increase her contributuions to SS.
But then considering that dh is older than me. I have been teasing him that the only reason he married me (so young and all) was to have a wife to support him into his retirment! LOL! We may not retire together but I guess at least we will have an income coming in for a while longer after his retirement starts.
You'll need even more faith that Everything Will Work Out In The End when you start having children, there are so many more things that could go wrong on you.
I guess I don't worry all that much about our marriage. If we ever did divorce, my husband would be financially worse off than me, he's just not good at managing money (and he admits it).
For the things I do worry about, I like Dale Carnegie's advice: Figure out what the worst-case scenario is, accept that it might happen to you, and then do what you can to improve your situation so that you end up with something better than the worst case.
IT may be slightly different becuase you're in Quebec & they have different rules than teh rest of the country.
IF you were to split then you'd get half. WHile it won't be as much as if you were both together anything is better than nothing, yk.
Now what you should be doing is having DH make Spousal RRSP's. The RRSP will be in your name, but your DH will get to claim them when you do taxes as he does with his own RRSP's(I'm presuming you are doing that already). You can also take our regular RRSP's, but since you have no income you won't be able to use them as a tax deduction.
One thing to keep in mind is if your DH is older than you he can still take out Spousal RRSP's until YOU are at the age limit so you have that little time between when DH turns 70(I believe) and when you do.
It's a good idea to have your own retirement money JIC your DH dies. You will get his but if you don't have your own then it won't be increasing the same.
I suggest buying Gail Vaz Oxlade's book Its' Never Too Late.
You're in Canada, we can have tax-free-savings account for everybody. That's $5000 a year per person and can build up nicely, and you don't need to pay tax when you withdraw. Plus there's spousal RRSP. If you guys are not low-income that is. Medium income people benefit quite well from RRSP. You and your spouse can split it evenly. Say if he's allowed to contribute $10000 a year to his RRSP, he can instead contribute $5000 to his and $5000 to yours. You can't go over his allowed limit, but this means you can split income in retirement and possibly pay less tax over all. Not to mention to make you feel secure.
If you're low income, don't bother with RRSP, just do the TFSA.
*Oops, didn't notice people already mentioned spousal RRSP. :D
See? That's why I love this place. I didn't even think about having him contribute to my RRSP. I've worked before but at low paying jobs so my retirement fund is pretty small. We used to be low income the first 2/3 of our relationship: both having low paying jobs or one or the other of us going back to school at vocational/technical level. Then there was the big push to pay off debt and save for a house. Then we were putting all our extra money into the house... now we're finally getting to a place where things are starting to straighten out and we can plan further into the future instead of trying to figure out how to get through the next year.
I suppose... our house is fairly simple and will be paid off quickly and then we'll have all that extra money we'd be putting into savings (I would hope!) so even though our physical (?) assets would stay small, we'd hopefully have a good amount of money set aside in the end. And DH and I are fairly open with money, share a bank account etc. He had a TFSA but we used that money when buying our house. We've always planned to put money back in, both in his name and in mine. Yes, that's right, he IS totally willing to money aside in my name, he was after me at some point to open a TFSA. I feel so weird asking for him to do that, even thought I KNOW I contribute to the household, I still feel weird that I don't bring in money. :/
DH's parents split when he was in his mid teens and they had a long, drawn out battle over who gets what. So that plays into it too. I think DH is fairly healthy when it comes to money though. His brother didn't even want his wife's name on any documents when the bought a house. Can you imagine? They're not together anymore yet she has the house....
We're going through finances now (yay! tax time!) so I'll mention both the spousal RRSP and TSFA. Anything else?
TFSA are almost equal to an RRSP. The main difference is you do not have the tax return deduction with a TFSA.
HOWEVER a HUGE benefit to a TFSA is even though there is a $5000/year limit if you take out that money the NEXT year you can put in the $5000 + the amount you took out the previous year without any penalty.
ie, you put in $5000 in 2009 & $5000 in 2010. You took the full $10,000 out at the end of 2010. In 2011 you can put $15,000 in with no fees.