Switching To The 24-Hour Workday: Financial Implications Of Stay-at-Home Parenting


Switching to the 24-Hour Workday:  

Financial Implications of Stay-at-Home Parenting


Washington, D.C., August 25, 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) Ambassador Paul Jarvis, CFP® shares ways parents can prepare for making the stay-at-home parenting decision.


Understanding the complete picture is critical when making big decisions such as stay-at-home parenting.  Make sure you evaluate both the personal costs as well as the financial costs before making the leap,” Jarvis says.


In the latest installment of “Let’s Talk Planning” blog (LetsMakeaPlan.org), CFP Board 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.


It is not a CFP® professional’s job to impose his or her 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. 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.




The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  CFP Board currently authorizes more than 70,000 individuals to use these marks in the U.S.


CONTACT: Dan Drummond, Director of External Relations P: 202-379-2252 M: 202-550-8259 E: ddrummond@cfpboard.org Twitter: @cfpboardmedia



The information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.