Thursday, October 15, 2009

What every stay-at-home mom should know about Social Security and Medicare

The following post, which was uploaded in May, is based in part on the “Money Matters” chapter of my book, The Stay-at-Home Survival Guide. I am re-posting the article now because I'm speaking to a stay-at-home moms club later this month about personal and family finances, and just today a reader emailed me with a question about her future Social Security and Medicare eligibility. I was able to answer her question by visiting, which has a lot of information specific to the complicated retirement issues that impact women.

Every May, in honor of Mother's Day, announces how much the work of a stay-at-home mother is worth. Her annual salary, or value, since in the real world the salary is a fantasy: A whopping $122,732. (And that’s based on only 10 job functions typically performed by stay-at-home moms.) It’s nice to be valued.

What isn’t so nice is that although stay-at-home moms are given lip service about their value and importance, full-time stay-at-home motherhood is not recognized in any way as the job it really is. While I’m not saying stay-at-home mothers (and dads) should be paid a salary, per se, it sure would be nice if those years as primary caregivers of young children weren’t so potentially damaging to a full-time parent's future Social Security and Medicare benefits.

(A caveat: For purposes of this discussion, let’s just assume that Social Security will be around when you become eligible to collect retirement benefits. Currently, the age at which people born after 1960 can collect full benefits is 67. Please put out of your mind the possibility that by time you’re 67-years-old the full-benefit age will be 92.)

Here’s the rub: A person’s Social Security benefit—which is the value of the monthly check she will receive in old age—is based on having a total of 35 years of paid employment. F
or each year worked, a certain number of “credits” are provided. You need to have 40 credits to be eligible for your own Social Security retirement and Medicare health insurance benefits. (At the current four credit maximum per year, that requires at least 10 years of employment.) To calculate the value of a person’s retirement benefits, the Social Security Administration totals the earnings from the highest 35 years of income, and then divides that number by 35. Using various rate sheets and tables, that sum is then translated into a benefit. Men generally have no problem meeting or exceeding a work-life of 35 years (unless of course they die). Women have a tougher time.

The unfairness of the benefits formula is that a woman gets zero — zippo, nada, a big N.O.— benefit or recognition for the years she works around the clock as a stay–at–home mom. As women are more likely than men are to step in and out of the workforce, a woman’s 35 years often includes many years of zero or near zero income, which drags down her average and is one of many reasons a woman’s Social Security check is commonly smaller than a man’s.

Naysayers argue that because stay-at-home moms don’t earn an income, they don’t contribute to the economy or the Social Security coffers. A counterargument is that stay-at-home mothers do contribute mightily to the economy as consumers and as part of a taxpaying couple. Because there is no “official” benefits-related recognition of the work of stay-at-home mothers, women (as well as an increasing number of men) are essentially having to choose between their children’s immediate needs and their own need for financial security in old age. Politicians, religious leaders and society-at-large drone on about the importance of family, and the importance of parents, especially mothers, to be at home caring for their children. If we value children, and value women, we need to figure out a way that parenthood doesn't financially harm women.

In an article for the advocacy organization Mothers and More (, its president at the time, Kristen Maschka, calculated that by leaving the workforce for seven years to stay home with her child, she would be forfeiting $2,000 a month in future Social Security benefits. “Assuming I live to be eighty-seven,” she writes, “that’s nearly half a million dollars.” (Another great advocacy organization for moms is

The cost of an unpaid stay–at–home career—or a paid career that makes accommodations to parenting responsibilities—varies for each woman.

You can calculate both your future benefits and losses by visiting

In lieu of recognizing that stay–at–home parenting is work, the government allows a married woman to collect off of her spouse’s work history instead, if receiving 50 percent of his benefit amount calculates to being more than 100 percent of hers. (And this scenario is also true in the other direction, with the husband collecting based on his wife’s earnings.) So if a woman and her spouse make it to retirement together and an anniversary of more than a decade of marriage, she can collect either her benefit or, if he's of Social Security age, an amount that’s half of his. For example: If John gets $5,000 a month, Jane gets $2,500, so as a couple living together they bring in $7,500 monthly.

A divorced woman can collect spousal benefits, so long as the marriage lasted 10 years. In such a scenario, a divorced Jane who had 10-plus years vested in a marriage can still claim the 50 percent spousal benefit, but since she’s no longer in the same household as John, unless she remarries, the Social Security income coming into her home is just $2,500 instead of the $7,500 she would have had access to had the marriage not dissolved.

Unfortunately, because of the decade rule, a woman who stayed home with her children for nine years of her nine-year marriage receives no spousal-linked Social Security or Medicare benefits. An unmarried stay–at–home parent who has children with a partner has no protection. If she has her own work history, she may have access to a benefit of her own. But if she were a teenage or young mother and continues to have a minimal employment history, she’s at risk of becoming a very poor old lady.

Another inequity: Stay-at-home parents don’t qualify for private disability insurance because such insurance is for replacing income from work, but sometimes it's their work that needs replacing. If something terrible happens to a stay-at-home mom and she can’t work for a year (as a stay-at-home mom) will her family be able to afford the $122,732 needed to hire her replacement?

For more information about your Social Security eligibility and benefits, visit the Social Security Administration website at or


chris said...

This is unfair. I worked with a woman who stayed working long after her peers had retired. Now I understand what she was talking about when she said she had to keep working to improve her Social Security benefits because she had stayed home with her kids for several years. (She was also divorced.) The system might work for stay at home moms who make it to retirement age with their spouse, but it sounds like lots of women may be at risk. Taking time off to care for children shouldn't have to be so risky. It would be nice if some women's group or leaders took up this cause, but with all the other needs on America's plate it isn't likely.

Vickie said...

It seems mothers can't win no matter what they do. Depending on the day we're criticized for staying in the workforce and for staying home. Right now I'm feeling its stay at home moms who are being criticized for not staying in the workforce and "doing it all." But then those who think moms should stay home aren't willing to provide moms the protections other workers receive.

Anonymous said...

This happens to stay-at-home dads too! My husband was ready to return to work when our youngest started 1st grade (kindergarten was 1/2 days). Unfortunately, he fell & now has a permanent disability. However, he does not qualify for any social security/disability benefits until he turns 67, since he stayed home for 7 years to care for our children. In our area, my husband's paycheck was just enough to pay for the cost of day care services. Now that he is disabled, it is like being a single parent with 2 elementary school children. I go to work & come home to do domestic work. Why doesn't President Obama look at this problem?

Melissa said...

Sorry to hear about your husband. I didn't mean to imply that the unfairness only happens to moms. It hits all people who leave the workforce to care for children. I think President Obama has so many problems to solve that the needs of at-home parents won't be addressed unless parents speak up. (Check out as a good advocacy group for moms and families.) However, I do hope that with the availability of a public health insurance option--one that people can purchase on a sliding scale based on their income--folks such as your husband with pre-existing conditions will be able to access health and disability coverages they currently can't. (Since private insurers don't want to do business with sick or disabled people, and it's not in their interest to provide affordable coverage.) Interesting historical factoid: Part of the reason FDR created Social Security and other safety net programs is that, having been paralyzed by polio himself, he realized that terrible things happen to people through no fault of their own. His wealthy family had the resources to care for him. He appreciated that and had empathy for people who didn't have his (inherited) good fortune. Many people don't believe in government-backed safety nets until they're the ones needing them.

Alexis said...

This was the data that really hit home for me. Combine the fact that I will have missed out on almost a decade of full-time work between Navy moves and child rearing, but the odds of me working more than part time for the duration of my husband's Naval career are pretty low. I am just counting on using half my husbands benefits since I may never get enough credits. I am still sure it was the right decision for us, but the sudden realization of opportunity cost was a bit harsh!

AnneMarie said...

Alexis: You might get enough credits before you retire, but because you'll likely have earned so little compared to your spouse or people who never WORKED full-time at home caring for children you're right, part of your husbands benefit will likely be worth more than your own. I read in Melissa's book about a SAHM who actually made her husband pay her a salary for leaving her career to be a stay-at-home mom. It's not the solution to this problem, but an interesting idea.

Anonymous said...

And now, for the past 13 yrs I have been home raising a grand daughter into a beautiful well adjusted young woman. I have become disabled, with no chance of going back into the work force and no chance to get any disabilty.

Anonymous said...

It is even worse if a SAHM is older than her husband. In my 1st marriage I was married for 18 years and worked part time jobs, but did not make much money as I was also a part time SAHM. I was then divorced at age 37, and remarried (nulling any collection of SS from the 1st marriage) at age 39. I had my 2nd child at age 40 and was a fulltime SAHM and homeschooled my child also. I am now 66, cannot collect on my 1st marriage and cannot collect on my 2nd marriage either because he is 14 years younger than me and in order to collect on his...he has to be collecting also. It wouldn't be so bad if my 2nd husband was a strong wage earner, but he is not. Our budget is extremely tight and personal health prevents me from working. I only wish I had known.

Melissa said...

Wow. That's good info to know. Thanks for sharing.

Anonymous said...

Do you think stay at home Moms should also get a 401K as well? Social Security is paid out based on what you pay in. You make a choice to stay home, it is part of what you need to evaluate. Our social security is disappearing, we cannot start paying for more people that never paid into it.

Anonymous said...

It is RIDICULOUS to think that because you CHOOSE to be a stay at home parent you should receive any type of benefit from the taxes we parents who have to work pay. Lucky you, you can afford to stay at home and raise your children. I can't. No awy should I pay for your choice. I don't even have a choice. If you want benefits, go to work and pay taxes. If you want to whine about how hard it is to raise kids, maybe you should have considered that before you had children. Sorry, you can't have your cake and eat it too and neither can I.

Anonymous said...

Mrs. "Ridiculous",
Your comments place your credibility in question, and your opinion irrelevant.

Luck has never had anything to do with our choices. I consider my stay at home spouse to pay her share of taxes since we file jointly each year. In fact, in each of the last 10 years we have reached the contribution cap. Hence, she has paid (through me, at half rate) more than most Dual-Income earners combined. Possibly, in the last 10 years, she has contributed more than you ever will.

I suspect your own early-life fly-by-the-seat-of-your-pants choices have removed the freedom of raising your children in the way you would like to. Sin can be forgiven but the consequence remains.

As far as how hard it is to raise children, how would you know? While you are working, you are not actually raising yours, someone else is, a babysitter, a daycare, or another family member.

My spouse is happy, our, children will be high-functioning United States citizens, our financial future is fine, and we will be entitled to our benefit, perhaps more so than you.

Of course, we did make better early-life choices, and so will our children. How about yours? Oh that’s right, someone else is raising them.

Good luck with that, and have a nice day

Anonymous said...

Just a note to the disability end, Thrivent Financial for Lutherans has Stay-at-home Spouse disability insurance.

Anonymous said...

Something else to think about. Those of us who have stayed home to raise our children are many times in the position to be now caring for our elderly parents. We have to balance what portion or all of our income would be used to help take care of our elderly family members since the cost of assisted living or nursing home care is so expensive. So I go to work - probably minimum wage since I have been out of the workplace for decades - and have to pay to have someone do the assistance for my parents that I would be doing if I were at home. I would be contributing to social security but my income would be less than the income I would receive in spouse benefits when I retire. In some instances you are caught between a rock and a hard place when it comes to making the decision to find work after your children are grown.

jluther said...

Thrivent Financial for Lutherans stay-at-home spouse disability insurance has a maximum benefit of $750 per month. That's better than nothing or a flat $25K benefit, but it isn't enough.

What is it about insurance companies that they don't want to cover this? It's insurance, which is a transfer of risk contractual agreement. If I'm willing to pay the premium, why can't I get whatever coverage I want?

I was able to get a life insurance policy for my wife with a benefit of $500,000. I could get more if I wanted, so why can't I replace my $80K income if my wife becomes disabled? This would allow me to come home and take care of both her and the children! But I can't do that. This leaves a big risk in my life.

And to those of you saying I "chose" this lifestyle: I wish I could "chose" to drop social security! Then WE could invest that money and use it as WE see fit when WE need it!

Anonymous said...

The way stay at home spouses are treated disgusts me. I too am a stay at home parent. I was constantly treated as either lazy or privileged, of which I was neither. We made the choice jointly after calculating how much I was earning and offsetting it by the costs involved of my working: Transportation, work clothes, DAYCARE, and the the second wage earner TAX penalty. We quickly discovered my working outside the home was COSTING us more than what I was earning...dipping into my husbands income. ~ There are many online dual income calculators that help you determine if 2 incomes is actually beneficial ~ Approx 9 years and 4 months into my marriage, I became severely disabled. My husband decided to leave me. We filed for divorce but only went as far as custody of the children. The divorce still has not been finalized (so technically we are still married ~ would be almost 12 years now - even having to file a joint tax return). My estranged spouse quit his high paying job, which caused me to lose my health insurance. He now lives in another state and has a much lower paying job. What is frustrating for me is that because I didn't work and this all happened short of our 10th year as a married couple, I am not entitled to disability based off of his income nor am I entitled to medicare because I didn't pay into it. My medical problems are becoming worse and I can't get proper treatment because there aren't any doctor's around here that accepts the state medicad. If I had medicare, there is a long list of doctor's I could see. I don't understand. We are still married, living apart, but filing joint tax returns and he is still paying into social security and medicare, but I don't qualify because I became disabled and separated from my husband in our 9th year. Separation is not divorce. Neither of us are free to remarry. I don't think it's fair. I get sicker and he gets to party. His financial future is somewhat secure while mine has only a guarantee of poverty and possible homelessness.

Anonymous said...

There is no reason that anyone who does not pay into the system should receive anything out of it.

Anonymous said...

Omg right on. I dont want a stranger raising my kids. My dad was disabled an stayed home to homeschool me an my brother after 5th grade now im married witb 2 kids of my own. While i feel i have no patience to teach without pulling my hair out ive opted for local christain school. But their r tons of choices out there for everyone u just have to look. Sometimes hard. I choose to stay at home with my kids. I love them an want them to know whats right an be God fearing belivers an teachers to other kids an later as adults. I belive our country has it totally backwards. Kids r there. They aint going away an someone has to watch them. One day you will grow old an be in care of someone. Do u want it to be your family? Or a stranger who wipes your butt an puts u in a wheelchair an ignores you except for every 2 hours in a nursing home without your familar surroundings as dementia takes hold? Familys r made for a reason an a purpose. They r to be there one one another through sickness an health. Old an young. Able or disabled. Yes someone has to make money or youll be on the street. But think of what matters most. My dad that has been disabled most of my life is the strongest man i know. Because of him no longer able to walk his health is bad. Is now diabetic an had a stroke a few weeks after my 2nd child was born. It has affected his short term memory. My mom has has to work my whole life an raise me an my brother. She works on the garden an plays with the dogs. An has to take care of her husband of almost 30 years. If they have taught me anything its u have choice. An as they get older me an my brother r there to help them. Me an my 5yr old help in the garden an clean house. My brorher helps mow an clear dead branches an took out the carpet an put in a hrdwood floor an ramp tp the porch for my dads wheel chair. (He use to have to sit on his butt an scoot down the the stairs. if his hip cracks the rest of the way it could parilize him from the waist down) but any way i belive family needs to be there for each other. I pay taxes filing jointly. But i dknt have credit (couldnt get a car even if wanted to) i use to work. Had a great boss an freinds at work that i still keep in touch with. But have only maybe 5 yrs of s.s. aint enough to do anything with. But when i grow an am old i want stay in my house surrounded by family. Not familar strangers. (There i wrote a book lol)


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