Need to start saving for retirement...

[Tinker'n'Fun]

First, I know what DH and I did with our finances were wrong, but whats done is done... But the good news is starting in September our finances will be getting better:

DS got a huge scholarship at school so his tuition this year is going down from $11,000.00 to $3,000.00. (Crazy I know that kind of $ and it's just high school)

DD got a full ride at college and even with dorming, we will not have to officially give her any money towards college, and she will be on the meal plan, so less groceries for me.

So with the two of these changes, I need to start saving for DH and I for retirement. I am totally disabled so my income does not increase much, DH has a good job where they work with him so that our end is always good. This year instead of giving him a raise, they are paying 100% of his health insurance. We used to pay 50%, so his pay is higher, just no raise.


So where does someone start? I know nothing about retirement or savings. I am thinking that we could start with about $350.00 per month, and this will increase when I get our new budget together in the fall. Any suggestions or information would be greatly appreciated.

Teach me Retirement 101!

 

[My_3_Mi_Princesses]

What I did when I started to get serious about saving for retirement is read as many sites as possible . A few of my favorites are:
-Fidelity(http://personal.fidelity.com/planning/retirement/retirement_planning.shtml.cvsr?refpr=guid02).

-ING (http://www.ing.com/group/showdoc.jsp?htmlid=440180_EN&left=false&menopt=eas|sav)

-Wells Fargo (https://www.wellsfargo.com/investing/retirement/)

Most sites will try to sell you thier retirment investments so becareful with that, but they also have helpful information like what exactly is a mutual fund or a Roth IRA etc. I do think the common theme you will see is to diversify your investments.

 

[Tinker'n'Fun]

What I did when I started to get serious about saving for retirement is read as many sites as possible . A few of my favorites are:
-Fidelity(http://personal.fidelity.com/planning/retirement/retirement_planning.shtml.cvsr?refpr=guid02).

-ING (http://www.ing.com/group/showdoc.jsp?htmlid=440180_EN&left=false&menopt=eas|sav)

-Wells Fargo (https://www.wellsfargo.com/investing/retirement/)

Most sites will try to sell you thier retirment investments so becareful with that, but they also have helpful information like what exactly is a mutual fund or a Roth IRA etc. I do think the common theme you will see is to diversify your investments.

Thanks for the sites, I am going to look them over tonight after everyone is off to sleep.

I have tons of questions, so this may take a bit.

 

[JB2K]

The best advice I can give you is to talk with a professional financial planner.

You will get many schools of thought from internet boards (quite frankly, I'm surprised you haven't heard from others, yet) -- where your future is at stake, you'll want to do it right, all the way...

 

[DisneyNutMic]

I agree contact a financial advisor. They can all offer about the same things and fees are pretty close across the board so make sure it is someone you are comfortable dealing with.

 

[Tinker'n'Fun]

I agree contact a financial advisor. They can all offer about the same things and fees are pretty close across the board so make sure it is someone you are comfortable dealing with.

Where would one find a financial advisor? (I was honest , I have no knowledge on the subject)

 

[MickeyDisneyFan]

Where would one find a financial advisor? (I was honest , I have no knowledge on the subject)

Having worked as a Financial Advisor in the past at both small firms as well as large firms I would ask friends or neighbors if they have a FA they trust. Bigger firms will charge for advice, if you go with a ETrade or Ameritrade they offer some advice.

Before you give you money to any financial advisor check them out at
http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm

If they are not registered or have any problems it will show on that site. Do not EVER send a check in the name of the advisor, if they tell you that is the policy of the firm RUN.

If you want to do it yourself you can open a Etrade/tdameritrade/scottrade account and have money direct deposited into a Roth IRA or a Traditional IRA

I usually suggest a ROTH because you use after tax dollars and when you withdraw the money when you retire you dont pay taxes on it. If you have any other questions post them and Ill do my best to answer them.

 

[Tinker'n'Fun]

Having worked as a Financial Advisor in the past at both small firms as well as large firms I would ask friends or neighbors if they have a FA they trust. Bigger firms will charge for advice, if you go with a ETrade or Ameritrade they offer some advice.

Before you give you money to any financial advisor check them out at
http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm

If they are not registered or have any problems it will show on that site. Do not EVER send a check in the name of the advisor, if they tell you that is the policy of the firm RUN.

If you want to do it yourself you can open a Etrade/tdameritrade/scottrade account and have money direct deposited into a Roth IRA or a Traditional IRA

I usually suggest a ROTH because you use after tax dollars and when you withdraw the money when you retire you dont pay taxes on it. If you have any other questions post them and Ill do my best to answer them.

Thank you very much. I really need to read up on this tonight. I am not even familiar with IRA's. When I first got sick and had to go on disability they made me hand in my accounts as income. So even the accounts I did have, I am not really familiar with.

 

[traveljunkie2]

First, I would look into your husband's company's retirement plan. If his work provides a "matching" program take advantage of it and max it out. How this works: Many companies will "match" an employee contribution into their retirement plan, up to a certain percentage of his income (let's just say 3% for example). So your husband would have 3% of his monthly income taken directly from his paycheck and put into his company's retirement plan. The company would contribute/"match" another 3%. That's free money going into his retirement plan.

I would also suggest that you setup an emergency fund of at least 6 months income if you don't have one established already.

 

[Leshaface]

First, I would look into your husband's company's retirement plan. If his work provides a "matching" program take advantage of it and max it out. How this works: Many companies will "match" an employee contribution into their retirement plan, up to a certain percentage of his income (let's just say 3% for example). So your husband would have 3% of his monthly income taken directly from his paycheck and put into his company's retirement plan. The company would contribute/"match" another 3%. That's free money going into his retirement plan.

I would also suggest that you setup an emergency fund of at least 6 months income if you don't have one established already.

I was just going to post this!

That's exactly what I do, and it's your best bet!

 

[abmitch01]

I would read Financial Planning for Dummies and then the one they have on mutual funds. Explains the basics in an easy to understand way. Then maybe books with more detail. I read the first one just out of college and it set me up for handling my finances for the years to come. It really stresses the importance of retirement savings.

I love Fidelity and Vanguard. My 403B (401k for not for profits) is at Fidelity. My Iras are at Vanguard.

 

[MiMi2Three]

Just wanted to say congrats on the scholarship!!!!

 

[QVCshopper]

I mean this nicely--but, it sounds like you're getting a late start. Ideally, starting to save for retirement when you're young means you have years to compound interest. Ultimately, you need to save much less than if you start later in life. My DH and I both worked for a mutual fund company, and started saving at 21. But, not knowing you age, you probably should speak to someone to get a ballpark figure. Then, max out your IRAs (go for Roth; $5,000/year for each of you unless you are over 50--then $6,000) and definitely take the 401K match if you’re not doing so already. Also, investigate what SS you'll get. Vanguard and Fidelity have some free educational info on their website. Good luck--you can catch up, but it will take some time.

 

[Tinker'n'Fun]

I mean this nicely--but, it sounds like you're getting a late start. Ideally, starting to save for retirement when you're young means you have years to compound interest. Ultimately, you need to save much less than if you start later in life. My DH and I both worked for a mutual fund company, and started saving at 21. But, not knowing you age, you probably should speak to someone to get a ballpark figure. Then, max out your IRAs (go for Roth; $5,000/year for each of you unless you are over 50--then $6,000) and definitely take the 401K match if you’re not doing so already. Also, investigate what SS you'll get. Vanguard and Fidelity have some free educational info on their website. Good luck--you can catch up, but it will take some time.

No hurts feelings and you are 100% correct. I am 43, DH45. He works for a very small company with only 5 employees. They do not have company sponsored retirement fund. In his previous job, he worked for a hospital and has a small 403B (under 1,000.00) I would add to that if possible. It is diversified into several different areas. Still not sure if we can touch it though, even to add money.

My mother has a financial planner but just took out all her money becuase they changed companies and she was tired of paying the fee's. I can't ask my mother about investing though as her "thought process" is very poor right now.

I think I will start with reading on ROTH tonight. If I read correctly we could put $5,000.00 in that. It might be quite possible that they may be a good amount for me to start with this year.

The bottom line is that we are never going to be financially well-off. We get by each year, but squeak a lot. We have put our children before ourselves for way too long.

I have made some very stupid financial decisions, like this year's taxes went to pay for DD's senior trip along with paying off a loan...

As of this year though, I have reduced our debt to our home mortgage, a very small car payment, an interest-free loan to my mom for DD's high school tuition. No credit cards at all. We pay everything by debit, and only if we have it.


to the OP for the congrats on DS's scholarship. He so much loves H.S. and really wanted to stay there. We feel blessed that he was able to secure the scholarship with his grades.

 

[QVCshopper]

I know where you're coming from. My parents got a VERY late start (50s) b/c my dad flipped jobs so much. But, he's been working on catching up and should have a small pension w/ healthcare plus SS, which I am not counting on for myself. That said, I'm 30 years younger than him and have more saved in my 401K and Roth. Plus, he's now facing a layoff at 64 with potentially not enough money to retire on. That's why I can relate... I'm hoping to help him and my mom if I need to, but I'm also trying to educate them at the same time. I'm just lucky to have worked for a mutual fund company and write about 401Ks for them, so I learned a lot.

Go for Roth! When you retire, you can withdraw tax free, and you can get your initial investment out if you ever really need to. Best of luck to you and my parents. And your kids sound great--and well worth the investment!

 

[dvcgirl]

First things first, congratulations for getting started.

Secondly, if you do indeed speak with a financial planner, you're looking for a *fee-only* financial planner....not "fee-based", or anything other than fee-only. You find one here... http://www.napfa.org/ What this means is that you are paying them a few hundred dollars or more to sit down with you and assess your financial situation and hopefully lay out a game plan with you.

In all honesty though, I think that there's plenty of reading and work that you can do on your own before speaking to a CFP.

Here's the first rule of thumb in retirement savings as for where the money goes. First, if your DH's employer offers a 401K plan with a "match" you want to contribute into that 401K up to the match. That's free money that you don't want to leave on the table. After the match, and assuming you make less than a 164K combined income, you would want to max out two Roth 401Ks. It doesn't matter that you don't have an earned income, your husband can open up a spousal Roth for you. After that you would go back to the 401K and max that out. Being that you're looking to invest roughly $4,000 a year, this isn't an issue right now.

As for where to put the money inside those accounts, well, there are some really easy ways to save for retirement these days based on your age. They are called Target Retirement Accounts....and are based on the year during which you think you'll retire. DH and I are relatively savvy with respect to our finances, but don't want to spend a ton of time working on asset allocation (where the money is invested). These funds base the investments on your age. The money is invested more aggressively early on (more in stock mutual funds) and more conservatively as you begin to reach your retirement date (so more in bonds and cash) etc. Your husband's 401K (if he has one) may have this type of option.

I will tell you that my husband's employer has T. Rowe Price and our 2030 fund has done quite nicely. But not all of these funds are as good as others, so you need to see what the returns look like.

To start, you need to do some really basic planning on how much you'll need in your nest egg when your retire. A good site to get a ballpark idea is www.choosetosave.org/ballpark/. Typically, you want to shoot for about 80% of your combined income as your goal for retirement income. When you fill in the worksheet, you'll see that you may include social security (and disability income in your case) as a part of the retirement income. I would not use the "SSI estimator" though, as I don't believe we'll see that amount. A ballpark guess on my behalf is that we'll see somewhere between 60-70% of what we've been told we'll get. My DH and I don't factor Social Security income into our retirement planning at all. Anything we do get we'll consider "gravy", and will likely be used to off-set health care insurance supplemental insurance.

So, the good news....is that you've gotten started. But the bad news is that based on your childrens' ages, I'm guessing that you're getting a late start. I know you can't beat yourself up for what's in the past, however, you really need to make retirement savings a *huge* priority for you from this point forward. You're also probably young enough that Social Security is simply not going to be there in the form that it is today. Neither is medicare. When you fill in the worksheet on that choose to save site, you'll understand what I mean. But you can't let that freak you out. Information is vital to changing your financial future. And unless you have a goal to shoot for, you won't know where to go. And even if that goal seems insurmountable, I think it will serve as the wake-up call that many Americans are getting these days.

Many financial sites/experts say that 15% of your gross income is what you need to be investing for retirement. I would say that's a fair number if you've started in your early 20s. By your 30s, which is when many people get serious about retirement, the % goes up to 20%, and if you're in your 40s....that number is unfortunately over 25%. You simply don't have as much time for your money to grow.

And based on the fiscal state that our nation finds itself in with respect to debt and future entitlement payments, well, many, many promises are going to have to be broken. Whether it be private pension plans, municipal/state/federal pension plans, or entitlement programs....the money is simply not there. Don't believe me? Do a little reading on what's happening in Europe these days. Greece in particular. All sorts of promises are being broken.

Again, not trying to freak you out, but hoping to convey the seriousness of the situation. Wishing you the best on your journey!