Planning retirement is not an easy task. You need to be extra careful while planning your retirement because it is what is going to determine how you’ll spend the most fragile years of your life.
It will determine whether you’ll be able to survive on your own without getting those monthly paychecks. More importantly, will you be able to enjoy that time without worrying about finances.
Will you be able to fulfill your dreams of living in your dream retirement destination, or traveling the world, or starting a business, or exploring things you always wanted?
All these basically depend on what actions you take today and what plans you make for tomorrow.
Yet, many people take retirement planning lightly for various reasons. Young people think it’s too early until it’s too late. While non-working women think they don’t need it because they’re dependent on their husbands, who will always be with them.
Even the working people don’t get serious in time because of myths like their bank savings are enough, or their expenses will reduce drastically after retirement, or they’ll be able to work for as long as they want.
All this is evident by the fact that 22% of Americans have only $5000 or less in retirement savings while 15% have none whatsoever, according to Annuity.org.
Today, we’ll learn from one of America’s top financial advisors, Suze Orman, how to plan for retirement the right way.
She has already talked a lot about the “Suze Orman Ultimate Retirement Guide” before, but with the changing time and circumstances, what should be the ultimate retirement strategy now?
Suze Orman’s Ultimate Retirement Guide
Retirement planning is not one size fits all. What should you do and what should be your retirement strategy depends on different factors such as your age, employment status, disposable income, marital status, number of kids, etc.
For this blog, let’s take an example of a stay-at-home mom, who’s husband is making a decent income. And also a single mom who’s supporting herself.
1. Be Independent
First of all, if you’re a stay-at-home mom, then you’re already doing one of the hardest jobs in the world. And the fact that you’re not getting compensated for it makes no sense.
The first thing you need to do is be independent of asking for money from your husband or someone else when you need it.
As per Suze, every single stay-at-home mom needs their own savings account, their own emergency fund, their own retirement account, and their own credit card. You need things in your name and your name alone.
Sit down with your counterpart and say I want the money of my own. I want some independence because I deserve it.
Once you have enough independence that you don’t need to seek your husband’s permission before spending, you can think about having a retirement plan and putting money into that.
2. Set Up Your Retirement Accounts
If your partner makes less than $140000 per annum, they qualify for a Roth IRA, and you too qualify as a non-working spouse. You don’t need earned income to have that.
So the very first thing you should do now is get that money and fund your Roth IRA to the max, which, if you’re still younger, is six thousand dollars a year.
You also need to have an emergency fund of your own, even if you already have an emergency fund as a couple. It will help you stay worry-free and ready even for the worst-case scenario.
Now, where do you save the money? As per Suze, the very best place is what she calls the Ultimate Opportunity Savings Account at Alliant Credit Union.
Alliant Credit Union is one of the largest online Credit Unions in the United States. And until the end of this year, if you were to open an account with them and put in $100 every month for the next twelve months, Alliant will give you a $100 bonus or a 16.67% return on your money.
They’re also paying you a 0.55% interest rate. On top of that, there will be a sweepstake where one person is going to win $10,000, one person is going to win $5,000, and five people are
going to win $1,000 each.
It is an amazing opportunity because you’re getting paid to save. So take advantage of that.
3. Protect Your Kids
The next thing you have to do, once you have a Roth IRA and an emergency fund set up, is making sure that your kids are protected.
Sure, you keep your kids protected and they’re very safe around you, but what about when you’ll not be here? You need to ensure that your kids are safe even after you. And you can do that by properly drafting your “Must-have documents.”
If your kids are minors, they can’t inherit your money or wealth. If something happens to you both tomorrow or if you’re a single parent and something happens to you. What happens to your children then?
You might have all these life insurance policies that were supposed to go to your kids who you’ve named as beneficiaries, but since they’re minors, that money now ends up in a blocked account that they cannot get until they’re 18 years of age.
And if that is contested, then somebody’s got to go through probate, and it all becomes a huge mess.
Yes, your financial advisor might advise you to just add your kid’s names on his joint tenancy with the right of survivorship or make it a pay on death or a transfer on death account so that on death, everything goes to your kids without probate.
But what happens if you don’t die but are incapacitated? Your money is blocked again and you kids can’t have any of it.
But, if you have a legal document with an incapacity clause where your spouse or friend can sign for you, you can save thousands in legal fees, and your loved ones don’t need to waste their time in court.
According to Suze, every single person in American should have a Will, a Living Revocable Trust, an Advance Directive and Durable Power of Attorney for health care, and a Financial Power of Attorney.
You can get those documents from a lawyer. Or Suze, with the help of her personal trust lawyers, created these Must-Have Documents that you can go to Suzeorman.com/offer and buy.
The documents available on Suze’s website are sharable. So you can share them with your family and friends, and they’re editable as well, meaning you can make changes anytime without any extra charges.
Also, the documents are good for all of the 50 states in the US, and you can get them at an affordable price of $199.
Suze’s Advice For Moms
Whether you’re a single mom who’s at home because of your kids or a mom with a spouse supporting you in your mission to raise your kids, what’s really important is to make sure that your kids understand at a very young age that the most important thing is saving money.
The most important thing is not living beyond your means, but it’s actually living below your needs and your wants.
Don’t sacrifice your own retirement, your own savings account, your own everything just so you can put money in a 529 planner or whatever so that your kids can go to school and not have any student loan debt.
If you’re already well-off, have a 12-month emergency fund, you’re fully funding your retirement accounts, you have no other credit card debt, and your job is secure, then it makes sense to fund something like a 529 plan.
But if you don’t have all of that, you just need to tell your kids from a very young age that they’re going to have to do it themselves.
It doesn’t make you a bad mom or a bad parent if you can’t pay for your kid’s college. It’s more important to teach them good financial lessons than sending them to college on your money.
And always remember, self-care is not selfish.