Not prepared to retire
Hi Terry, I am a 46 year year old mother of 3, however only 1 is a minor. I have a home based day daycare. I am not where I think I should be as far as retirement is concerned. I can invest about 1000.00 – 1500.00 per month. My home is paid for and I don’t have a car payment. I do have about 100k saved. What should I do right now to get where i need to be to retire in 2040?
Terry Says
I have a couple of ideas for you, but let me start by changing your thinking. You’re doing a great job of saving — especially compared to so many people who write me about being buried in debt. So first, pat yourself on the back!
Second, a lot can change in the next 20years. You’ll likely work longer than that — although not necessarily at your current business. By then I’m guessing the SS retirement age will be about 70. And the longer you can work, the more you can cover current expenses and keep from dipping into your savings. So perspective is important — and while it’s nice to have a goal for retirement, I’m guessing that your date will be farther away than you think. So consider other aspects of your business that you can keep doing long after you’re tired of running around after little kids!
Have you been putting your savings in a Roth IRA — where you can contribute $6,000 a year. You can do a contribution for 2020 up until April 15th, and you can make your 2021 contribution early in the year — all out of your savings. This money will grow tax-FREE for your retirement. So contact Fideity or Vanguard to open this type of account. Just choose either the S&P 500 stock index fund, or their Equity/Income fund (a bit more conservative) and let the money keep working for you over the years.
There’s no law against saving more than the $6,000 a year you can put in a Roth IRA, but be sure to keep some in reserve in a money market account in your bank. It won’t earn anything these days but it will give you peace of mind.
