How to Win at Family Finances with a Single Income

Admin • February 2, 2024

Deciding to have one spouse stay home with the kids while the other spouse works is a big decision. While there are many benefits for your family, it also means living on a single income. For many families, this transition can be challenging from a financial perspective. However, with some planning, lifestyle adjustments, and clever strategies, you can thrive on one income — even with kids! 

So let’s explore the dynamics of single-income households, talk about some helpful financial planning tips, and review the key strategies for thriving as a single-income family. Whether you’re a stay-at-home parent or a working parent, understanding the financial implications and planning ahead is crucial for a secure future.

Advantages and Disadvantages of a Single Income

Managing a household on a single income, whether due to choice or circumstance, comes with its own set of advantages and challenges. 

Advantages of a Single-Income Family:

  1. Quality Time with Family: In a single-income household, one parent can devote more time to family activities and child-rearing, strengthening family bonds and creating lasting memories.
  2. Streamlined Lifestyle: With a single income, families often become more intentional about spending, focusing on needs over wants, which can lead to a simpler, more sustainable lifestyle.
  3. Flexibility for Pursuing Passions: For the stay-at-home parent, having a single income can open doors to explore personal passions, hobbies, or even side businesses without the constant pressure of a 9-to-5 job.
  4. Potential Cost Savings : With one parent staying home, the cost savings for childcare can be huge! According to ValuePenguin , the average cost in the United States for full-time childcare for one child is $9,991 per year. Depending on your state, that cost could be even higher.  

Disadvantages of a Single-Income Family:

  1. Financial Strain: The most apparent challenge is the financial strain that can potentially come with relying on a single income. Budgeting becomes crucial to make ends meet and plan for future goals.
  2. Dependency on One Income Source: Single-income households are more vulnerable to economic downturns, job loss, or unexpected expenses. Diversifying income streams becomes essential for financial security.
  3. Career Sacrifices: The working parent (particularly in a single-parent situation) may face limitations in career advancement or opportunities for professional growth due to the primary focus on family responsibilities.

Tips for Thriving on a Single Income 

Thriving on a single income requires careful financial management and planning. Whether you’re a working parent with a stay-at-home spouse or a single parent living on one income, here are some tips to help you thrive in a single-income household:

Evaluate Your Budget and Expenses

First things first: Take a good, hard look at your family’s budget and expenses. Where is your money going each month? Are there areas you can cut back in order to save? Even minor lifestyle tweaks can make a difference. 

For example, can you cut your grocery bill by meal planning, using coupons, or buying generic brands? Evaluating every expense and analyzing if there are wiser financial alternatives is essential.

Use a Budgeting System

Get serious about budgeting, and find a system that works best for your family. Popular options include the 50/30/20 budget, zero-based budget, the reverse budget , and the envelope system. While budgeting takes some time upfront, committing to a plan is crucial.

Stick To Needs vs Wants  

When money is not as plentiful, it’s critical to differentiate between needs and wants across all spending categories. Focus household spending on true needs — food, housing, transportation, utilities, insurance, debt payments, healthcare, etc. 

Wants like dining out, vacations, new gadgets, and hobbies may need to take a backseat. Create limits for discretionary categories until your income increases. Focus on spending on essential needs to help your one-income household thrive.

Lower Transportation Costs 

Getting around is likely your second biggest budget line item behind housing. So, put your transportation costs under the microscope as well. Could your family manage well on one car instead of two? Can you downsize to a more economical used car? Is public transportation a reasonable option for commuting? What about biking places when the weather permits, or carpooling with other families? 

Gas prices and car maintenance add up quickly. So, rethinking your transportation strategy can lead to significant monthly savings.

Take Advantage of Tax Deductions 

As a single-income family, take advantage of all the tax deductions and credits available to you to reduce your taxable income as much as possible each year. As the sole breadwinner, deductions your working spouse can take might include a portion of your mortgage interest, property taxes, student loan interest, and medical expenses. 

Many child-related tax benefits (state and federal) have increased in recent years, providing extra relief for single-income families trying to make ends meet. Make sure to keep good records to claim these deductions and credits. Every little bit helps!

Create New Income Streams  

While one spouse may provide the primary income, getting creative about bringing in secondary streams can significantly help ease the financial burden. Exploring opportunities for additional income from a side hustle can provide extra financial support. So explore your skills and interests to see if you can put them to work for your family.

Find Community Support

 

It can feel isolating and overwhelming at times to live on a single income. Connecting with others who “get it” is tremendously helpful. Join online groups of one-income families to swap money-saving tips and encouragement. Meet up with local stay-at-home parent groups for moral support, too.

 

Don’t Forget the Future

It’s essential to also plan for the future. Building a robust emergency fund is crucial to weather unexpected financial challenges — plan for three to six months’ worth of expenses in your emergency fund.

Remember to also add to a retirement account. Small, automatic deductions from each paycheck invested over decades can lead to significant gains. Even if only one spouse works, the non-working spouse can usually contribute to an IRA. Check with your financial advisor for special rules that may apply.

Also, consider the potential of passive income streams down the road, such as rental properties or monetizing a hobby. These additional income streams can also help to build your retirement funds.

Let Five Pine Help Your Finances Thrive

 

Living on one income will require adjustments to your family’s lifestyle and spending patterns. At Five Pine Wealth Management , we’ll work with you to develop a financial plan that will help you thrive and achieve your long-term financial goals on a single-family income. As fiduciary financial advisors, we are dedicated to acting in your best interest, offering guidance specific to your circumstances. To schedule a meeting, send an email or call us at 877.333.1015. Let us help you create a fulfilling life for yourself and your family.

 

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Is Paying Off Your Mortgage in Your Late 50s the Right Move?

February 19, 2026
Key Takeaways Paying off your mortgage before retirement reduces monthly expenses, lowers your income needs, and provides psychological peace of mind, but ties up money in an illiquid asset. Keeping your mortgage and investing instead may provide higher long-term returns, better liquidity, and tax advantages, but requires comfort with debt and market volatility. Your mortgage interest rate, risk tolerance, retirement timeline, and other income sources should all factor into your decision. A hybrid approach — paying down part of the mortgage while keeping some money invested — can provide a balance between security and growth potential. At 58, let's say your mortgage balance is $180,000. Your retirement accounts have grown to $850,000. So now you’re wondering: should I just pay off this mortgage and be done with it? We have this conversation regularly with clients in their late 50s and early 60s. Some choose to go ahead and pay off their mortgage. Others keep it and invest the difference. There’s nothing wrong with either choice, but what’s right for you depends on your specific situation. We’re here to walk you through how to think about this decision: The Case for Paying Off Your Mortgage Before Retirement There’s something undeniably satisfying about owning your home outright. Beyond the emotional relief, there are practical reasons that make sense: Reduced monthly expenses in retirement. Housing is typically your highest fixed cost. Eliminating that payment frees up cash flow for other priorities, like travel, healthcare, and helping the grandkids with college tuition. Lower income needs mean lower taxes. When you don’t have a mortgage payment, you don’t need to withdraw as much from retirement accounts. Smaller withdrawals often mean staying in lower tax brackets and (potentially) reducing Medicare premiums. Peace of mind during market downturns. If we hit a recession early in your retirement, having no mortgage means you won’t feel pressured to sell investments at depressed prices to cover housing costs. Guaranteed return on your money. Paying off a 4% mortgage is like earning a guaranteed 4% return (tax implications aside). We had a client who paid off her $220,000 mortgage at 59. Mathematically, she probably could have earned more by investing that money. But her reasoning made sense for her, “My parents stressed about money their whole retirement. I don’t want that. I want to know that my house is paid for, no matter what happens.” For her, the psychological benefit outweighed the potential investment returns. The Case for Keeping Your Mortgage and Investing Instead For others in their late 50s, keeping the mortgage and investing that money elsewhere makes more financial sense: Higher potential investment returns. If your mortgage rate is 3-4% and you can reasonably expect 6-8% average returns from your diversified investment portfolio over time, the math favors investing. Maintain liquidity and flexibility. Money tied up in home equity isn’t easily accessible. You’ll have more options if that money is in investment accounts rather than in illiquid home equity. Tax advantages of mortgage interest. If you itemize deductions, you might still benefit from the mortgage interest deduction, which reduces the effective cost of your mortgage. Inflation works in your favor. Your mortgage payment stays the same while everything else gets more expensive. In 10 years, your $2,000 payment will feel smaller relative to other expenses. We worked with a couple who were considering paying off their $300k mortgage at age 57. Their mortgage rate was 3.25%, they were in a high tax bracket, and they had at least twenty years of retirement ahead. They decided to keep the mortgage and invest instead. Five years later, their investment account had grown enough that they could pay off the mortgage if they chose to, while still having substantial assets left over. The Middle Ground: A Hybrid Approach You don't have to choose all-or-nothing. Some clients find that a combination works best: Pay down part of the mortgage . Reduce your balance and shave a few years off your repayment timeline while maintaining some liquidity. Recasting and refinancing options can also lower your monthly payment. Plan for a future payoff . Keep the mortgage while you're still working and in higher tax brackets. Then plan to pay it off in a few years when you retire and your income drops. Use bonus income strategically . Consider using windfalls, bonuses, inheritance, business sale proceeds, to pay down the mortgage while keeping your regular savings and investments intact. How to Think Through Your Decision Here's how to evaluate the mortgage payoff vs investing decision for your situation: What's your mortgage interest rate? Below 4%, the mathematical case for keeping it gets stronger. Above 5%, paying it off starts looking more attractive. How much liquid savings do you have? If paying off your mortgage would drain your emergency fund or leave you with little accessible cash, that's a red flag. What's your risk tolerance? Be honest. If having a mortgage payment keeps you up at night, no investment return will make up for that stress. What are your other retirement income sources? Social Security, pension, rental income — these reliable sources might make carrying a mortgage more manageable than you think. When Paying Off Makes Sense Based on our experience, paying off your mortgage before retirement tends to work best when: Your mortgage interest rate is relatively high (5%+) You'd still have 6-12 months of expenses in emergency savings after payoff You're naturally debt-averse, and the monthly payment creates genuine anxiety You have other sources of retirement income You plan to stay in this home for the foreseeable future When Keeping Your Mortgage Makes Sense Keeping your mortgage and investing instead usually works better when: Your interest rate is low (below 4%) You're in a high tax bracket where the mortgage interest deduction provides value You have a long time horizon (20+ years of retirement ahead) You're comfortable with investment volatility You want flexibility and liquidity in your financial plan Getting Help With Your Decision At Five Pine Wealth Management , we help clients work through these decisions regularly. We review your complete financial situation, run the numbers, and help you understand the trade-offs so you can make a confident decision. A good financial advisor can run projections showing both scenarios, factor in your complete financial picture, help you stress-test different economic scenarios, and integrate this decision with your broader retirement, tax, and estate planning strategies. Whether you decide to pay off your mortgage or keep it and invest, what matters most is that the choice aligns with your goals, risk tolerance, and peace of mind. If you're wrestling with the mortgage payoff vs. investing question and want to talk through your specific situation, we're here to help. Call us at 877.333.1015 or email info@fivepinewealth.com . Frequently Asked Questions (FAQs) Q: Should I use my 401(k) to pay off my mortgage? A: Generally, no. Withdrawing from retirement accounts before 59½ triggers penalties. Later, large withdrawals can push you into higher tax brackets. If you want to pay off your mortgage, it's usually better to use funds from taxable investment accounts or savings rather than tapping tax-advantaged retirement accounts. Q: What if I want to downsize in a few years anyway? A: If you plan to sell and move to a smaller home within 3-5 years, keeping your mortgage makes more sense. You'd be paying it off only to sell shortly after, and that money could work harder for you in investments until you make your move. Q: Can I change my mind later if I keep the mortgage?  A: Yes, you can always pay it off later if your circumstances or feelings change. Once you pay it off, however, accessing that equity again (without selling) typically requires a new loan or a home equity line of credit, which isn't always simple or cheap.

What High Earners Overlook After Maxing Out Their 401(k)

January 26, 2026
Key Takeaways High earners maxing out 401(k)s at $24,500 are only saving about 8% of a $300,000 income in their primary retirement account. The mega backdoor Roth strategy can increase total 401(k) contributions to $72,000 annually with tax-free growth. A comprehensive approach can create nearly $3 million in additional retirement wealth over 20 years. It's 2026. You're checking all the boxes. You're earning upwards of $300,000 annually, and you're maxing out your 401(k) every year. You've reached the $24,500 contribution limit and feel confident about securing your financial future. Then you realize $24,500 represents less than 8% of your income. Over 20 years, this gap adds up to millions in lost opportunity. Thankfully, you're not stuck with the basic 401(k) playbook. There are sophisticated strategies beyond your contribution limit. 5 Strategic Moves for High Earners with Maxed-Out 401(k)s Here are five sophisticated strategies that can help you build wealth beyond your basic 401(k) contributions. All projections assume a 7% average annual return and are estimates for illustrative purposes. 1. Mega Backdoor Roth Contributions If your employer's 401(k) plan allows after-tax contributions, this could be your biggest opportunity. With employee contributions, employer match, and after-tax contributions, the combined 401(k) limit for 2026 is $72,000 ($80,000 if you're 50 or older). The mega backdoor Roth works because you immediately convert those after-tax contributions into a Roth account, where they grow tax-free forever. The catch: Not all employers offer this option. You need a plan that permits after-tax contributions and in-service Roth conversions. The impact: The available space for after-tax contributions depends on your employer match. With a typical employer match of 3-6% (roughly $10,000-$21,000 on a $350,000 salary), you could contribute approximately $26,500-$37,000 annually. At 7% average returns over 20 years, this creates approximately $1.1-$1.5 million in additional tax-free retirement savings. 2. Donor-Advised Funds for Charitable Giving If you're charitably inclined, donor-advised funds (DAFs) offer a way to bunch several years of charitable contributions into one tax year, maximizing your itemized deductions while still spreading your giving over time. You get an immediate tax deduction for the full contribution, but you can recommend grants to charities over many years. The funds grow tax-free in the meantime. The catch: Once you contribute to a DAF, the money is irrevocably committed to charity. You can't get it back for personal use. The impact: Contributing $50,000 to a DAF in a high-income year (versus giving $10,000 annually) can create immediate federal tax savings of $15,000-$18,500 while still allowing you to support the same charities over five years. 3. Taxable Brokerage Accounts with Tax-Loss Harvesting Once you've maximized tax-advantaged accounts, strategic taxable investing becomes your next move. The key is working with a financial advisor who implements systematic tax-loss harvesting throughout the year. Tax-loss harvesting involves selling investments at a loss to offset capital gains elsewhere. Done strategically, this can save thousands in taxes annually. The catch: Long-term capital gain rates (0%, 15%, or 20%) are lower than ordinary income tax rates, but you're still paying taxes on gains. It's less tax-efficient than retirement accounts, but far better than ignoring tax optimization. The impact: For high earners in the 35-37% ordinary income brackets, the difference between long-term capital gains (20%) and ordinary rates is significant. Effective tax-loss harvesting on $50,000 in annual gains over 20 years could save $150,000+ in taxes. 4. Health Savings Account (HSA) Triple Tax Advantage HSAs offer a unique triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. With 2026 contribution limits of $4,400 for individuals and $8,750 for families, this adds another powerful layer to your strategy. You can invest HSA funds just like an IRA and let them grow for decades. After age 65, you can withdraw the funds for any purpose, medical or otherwise. The catch: You must have a high-deductible health plan to qualify for an HSA. After age 65, non-medical withdrawals are taxed as ordinary income (like traditional IRA distributions), but you still benefit from the upfront deduction and decades of tax-free growth. The impact: Contributing the family maximum ($8,750) annually for 20 years at a 7% average annual return creates approximately $355,000-$360,000 in tax-advantaged savings. 5. Backdoor Roth IRA Contributions Not to be confused with mega backdoor Roth contributions! Even if your income exceeds the Roth IRA contribution limits, you can still fund a Roth through the backdoor method: make a non-deductible contribution to a traditional IRA, then immediately convert it to a Roth IRA. The catch: If you have existing traditional IRA balances, the pro-rata rule complicates things. You may want to consider rolling those funds into your 401(k) first if your plan allows. The impact: Contributing $7,000 annually through the backdoor Roth for 20 years at 7% average annual return creates approximately $285,000-$290,000 in tax-free retirement savings. What Compounding These Strategies Looks Like Over 20 Years Let’s look at approximate outcomes based on a 7% average annual return. 401(k) Only: Annual contribution: $24,500 Total after 20 years: ~$1M 401(k) + Mega Backdoor Roth: Annual contribution: $72,000 Total after 20 years: ~$3M Note: Mega backdoor Roth space varies based on your employer's match. These calculations assume you're maximizing the total annual limit. Comprehensive Approach (under age 50): Mega Backdoor Roth: ~$3.0M HSA: ~$350K-$360K Backdoor Roth IRA: ~$285K-$290K Strategic taxable investing with tax-loss harvesting Total retirement savings: ~$3.6M+, plus taxable investments Comprehensive Approach (ages 50-59): With higher contribution limits and catch-up contributions, total retirement savings can reach ~$4M+ over 20 years. Comprehensive Approach (ages 60–63 with enhanced catch-up contributions) Higher contribution limits during peak earning years allow for meaningful acceleration of retirement savings. The exact impact depends on timing, contribution duration, and existing balances. The Bottom Line The difference between stopping at your basic 401(k) and implementing a comprehensive strategy can approach $3 million or more in additional retirement wealth over time. Why Strategic Coordination Matters These aren't either/or decisions. The most effective approach coordinates multiple strategies while ensuring everything works together. At Five Pine Wealth Management , we help high-earning clients build comprehensive plans that go beyond the 401(k). We coordinate your employer benefits, tax strategies, and investment accounts to create a cohesive approach that maximizes your wealth-building potential. This requires working across several areas: Analyzing your employer's 401(k) plan for mega backdoor Roth opportunities Implementing systematic tax-loss harvesting in taxable accounts Coordinating Roth conversions and backdoor contributions Optimizing your HSA as a long-term retirement vehicle Ensuring charitable giving strategies align with your tax situation Maximizing catch-up contributions when you reach milestone ages As fiduciary advisors, we're legally obligated to act in your best interest. That means we're focused on strategies that serve your goals, not products that generate commissions. Ready to see what's possible beyond your 401(k)? Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation about your specific situation. Frequently Asked Questions (FAQs) Q: Does my employer's 401(k) plan automatically allow mega backdoor Roth contributions? A: No. You need a plan that permits after-tax contributions and in-service conversions to Roth. Check with your HR department. Q: How do I prioritize which investment strategies to use? A: Generally, maximize employer match first (it's free money), then fully fund your 401(k), explore Mega Backdoor Roth if available, max out your HSA, consider backdoor Roth IRA contributions, and then move to taxable accounts with tax-loss harvesting. We can help determine the right sequence for your circumstances.