I need advice for retirement, I hardly have any at age 46

I am 46 and for the last 15 years, I have been a stay at home mom. During this time, I bought and renovated a couple homes which gave me the money to pay off our house and 2 vehicles. I also had a couple small jobs for a short while (6 months total).

From age 25-30, I was a single mom going to college. I did not work during that time and still have student debt of around $20,000 (my husband also has 20,000 student loan debt). We have no credit card debt. We make purchases with credit cards and always pay them off at the end of the month.

From ages 18-25, I worked at jobs here and there...nothing big or substantial. Most of the jobs were paid cash.

As you can see, I have very very little in social security. I put $5,000 into a Roth a couple years ago and it has earned, as of today, a whopping $227.00. Even if I were to continue putting money into a Roth, at these gains, it obviously will not do.

My husband is a teacher, so his income is not great. He is a little better off than me as far as retirement, but he doesn't have much in either.

We have a little left over at the end of the year... thanks to having paid off our home.

I have 4 kids at home right now between the ages of 1 and 8.

I am looking for creative ideas where to start putting some money. Should I look into the stock market?

Thanks and let me know if you need more information.

You missed the stock market boat for the year already.

Some people just aren't going to get to retire these days, sad but true.

A teacher and a stay at home mom with 4 kids and student loan debt with 0 savings at age 45... theres no magic pill here. If you're gonna want to retire some day you're going to need to drum up income.

Look into babysitting/daycare for other people's kids, continue flipping houses if thats low risk and profitable.

College for 4 will cost over 100k/each by then.

Which means you need to be saving about 100k/year for the next 20 years, with an annual return of about 5% to have a shot at getting them to college and retiring by 65, assuming you withdraw 50k/year starting at 65 until you die at 90ish.

Being a SAHM is definitely work, but you don't have a paid job now, right? So what exactly are you "retiring" from? Eventually your kids will leave the house.

You had your fourth child at age 45? So it will start college when you are 63?

I think your husband will just have to share his SS and pension (if any) with you in retirement, just like he shares his income with you now.

Well you have a couple things going for you, a paid off house and your husband's pension.

Get your husband to contact HR and get an estimate for what that pension would be worth at whatever age you are looking to retire at, assuming he works until that age as a teacher.

Does he pay into social security? If so, he needs to get a social security estimate.

Track your spending for a couple of months and just get a handle on how much you're spending every month. How many of these expenses are still going to be around once the kiddos are out of the house? Try to come up with a back of the napkin annual estimate for a retirement budget. (Also think about how your life will change in retirement... will you need two cars in retirement? probably not. Will you downsize your house in retirement to some easy to maintain condo?, etc)

Take this annual estimate. Subtract social security. Subtract pension. Multiply by 25. This is how much you need to save.

Try to get a part time job somewhere and throw everything you earn into Roths (his and hers) first, then 401K/Roth IRAs after that. You are likely in a low tax bracket so you should take advantage of that by using the Roth IRA.

It won't be the easiest thing you've ever done, you aren't going to retire rich, but you might retire comfortably, but you need to take actions now.

needadvise said:   I will respond to everyone in a bit as I need to make lunch for kiddos. But, I wanted to throw in that one thing I am trying to figure out is what to do for our taxes this year. If my husband puts in 2,000 or more into a roth, he gets a credit of 200. I would get nothing for anything I put into a Roth.

If he puts 5,000 into a traditional, he would get a savings of almost 20%...about 975.00

I would get 290.00 for putting 5,000 in.

Is it still wise to put money into one or both of these accounts?If you are married, an IRA contribution in your name should have the same effect as an IRA contribution in your husband's name.

I dont know how to ask this and sorry if this sounds blunt:
Are you foreseeing getting divorced/being single in the future?

soupcxan said:   Being a SAHM is definitely work, but you don't have a paid job now, right? So what exactly are you "retiring" from? Eventually your kids will leave the house.

You had your fourth child at age 45? So it will start college when you are 63?

I think your husband will just have to share his SS and pension (if any) with you in retirement, just like he shares his income with you now.

This is the perfect example of why people need to plan for retirement and accept personal responsibility. To the OP, I'm not sure what stay at home mom-type of jobs you can do. I read a blog post a few months ago about a lady that was in a similar situation as you and turned to being a phone sex operator. There have been threads on legitimate stay at home jobs on fatwallet. Transcription services come to mind.

I don't see how you have a whole lot to worry about in retirement. IN fact you may end up making more money in retirement.

You husband probably has a pension and will get social security when he retires, that will probably give him just as much or nearly what he makes now.

On top of that even though you do not have social security earnings you can file for benefits under him, you would get 1/2 of his SS benefit minus any reductions for applying before your full retirement age.

This may end up giving you more money per month than you guys are bringing in now.

You also will not have the expenses of your children, no mortgage etc.

So If you can live off of 1 income now with 4 kids, I don't see why a couple with a pension and two SSA checks couldn't make out ok in retirement with no mortgage and no children

Unless you plan to really live it up in retirement or divorce your husband I wouldn't lose any sleep over this.

inform your kids early on that need to forget about college and start preparing for an early entry into the labor market so that they can care for mom

with four of them, even minimum wage should be sufficient to support you --- additional trade skills and you can do much better with them

(j/k)

You have 20k in student loan debt, what degrees do you have?

jd2010 said:   You missed the stock market boat for the year already.

Some people just aren't going to get to retire these days, sad but true.

A teacher and a stay at home mom with 4 kids and student loan debt with 0 savings at age 45... theres no magic pill here. If you're gonna want to retire some day you're going to need to drum up income.

Look into babysitting/daycare for other people's kids, continue flipping houses if thats low risk and profitable.


College for 4 will cost over 100k/each by then.

Which means you need to be saving about 100k/year for the next 20 years, with an annual return of about 5% to have a shot at getting them to college and retiring by 65, assuming you withdraw 50k/year starting at 65 until you die at 90ish.

What is the stock market boat? I assume when it was at a low?

I do have some in savings. This is one of the reasons I can put 10,000 into an ira today.

Besides not knowing the market in my area right now for flipping, I haven't had the time. This may be something I do in future though.

I don't have plans to pay for my kids college....unless something big happens.

soupcxan said:   Being a SAHM is definitely work, but you don't have a paid job now, right? So what exactly are you "retiring" from? Eventually your kids will leave the house.

You had your fourth child at age 45? So it will start college when you are 63?

I think your husband will just have to share his SS and pension (if any) with you in retirement, just like he shares his income with you now.

No, I do not have a paid job. Yes, my kids will leave the house, and I only hope that my health will be good enough that I can continue to work until I die. Wait, I would like to have a vacation in there somewhere.... I had my 5th and last child at 45. We made sure that wasn't going to happen again. My husband would share his retirement.

sun818 said:   If you paid off the house, that means you have extra income now? Why can't you put that in your Roth IRA? You have IRA options after max out your Roth IRA. I have a Vanguard Target Retirement Fund which lets me set it and forget it. The blend of investments become less aggressive as the fund gets close to your retirement year. Mine is 2040. Yours is 2030 based on your stated age:

https://personal.vanguard.com/us/funds/vanguard/TargetRetirement...

The others are right about having savings. Dave Ramsey says 3 to 6 months of expenses saved up, but you can go for 1 year if that makes you feel more secure.

We are able to save a little every year. We try to live carefully without "going without." Our biggest expense is probably groceries as we eat very healthy.

I do have 5,000 in Vanguards 2030 as does my husband. It has increased 227.00 (each) in one year since I transferred it. Is this how much it grows approx. in a year?

LiquidSapphire said:   Well you have a couple things going for you, a paid off house and your husband's pension.

Get your husband to contact HR and get an estimate for what that pension would be worth at whatever age you are looking to retire at, assuming he works until that age as a teacher.

Does he pay into social security? If so, he needs to get a social security estimate.

Track your spending for a couple of months and just get a handle on how much you're spending every month. How many of these expenses are still going to be around once the kiddos are out of the house? Try to come up with a back of the napkin annual estimate for a retirement budget. (Also think about how your life will change in retirement... will you need two cars in retirement? probably not. Will you downsize your house in retirement to some easy to maintain condo?, etc)

Take this annual estimate. Subtract social security. Subtract pension. Multiply by 25. This is how much you need to save.

Try to get a part time job somewhere and throw everything you earn into Roths (his and hers) first, then 401K/Roth IRAs after that. You are likely in a low tax bracket so you should take advantage of that by using the Roth IRA.

It won't be the easiest thing you've ever done, you aren't going to retire rich, but you might retire comfortably, but you need to take actions now.

Thanks, I will look into this. I know I need to start being aggressive. Another question... There is both a Roth IRA AND another one called "401K/Roth IRAs?"

What does it matter if you are in a low tax bracket for the Roth? I thought those were tax free when you got them out?

uutxs said:   needadvise said:   I will respond to everyone in a bit as I need to make lunch for kiddos. But, I wanted to throw in that one thing I am trying to figure out is what to do for our taxes this year. If my husband puts in 2,000 or more into a roth, he gets a credit of 200. I would get nothing for anything I put into a Roth.

If he puts 5,000 into a traditional, he would get a savings of almost 20%...about 975.00

I would get 290.00 for putting 5,000 in.

Is it still wise to put money into one or both of these accounts?
You talk about "I would get nothing", "he would get a savings" etc. Are you guys filing jointly or MFS?
Do you fully mingle your finances? For a SAHM with four kids and one primary earner, I would think it should be "we save xxx", "we get back xxx from IRS" etc.

We are filing jointly. I have control of the money as I do most of the buying, taking care of bills, taxes, etc...

What I meant about the Roth is that when I put $ into the TurboTax program, there is no tax benefit (no ira deduction) for doing so for me. When I put in money for him into the program, he gets 200 for doing so.

A stay at home mom with 4 kids and one teacher salary (assuming less than 110K per year), your household should easily get back 4K worth of Child tax credit a year, if you are married filing jointly and with an adjusted gross income of no more than $110,000.

http://www.irs.gov/publications/p972/ar02.html

Use this 4K tax credit and put it toward your retirement fund. Put it into retirement account for more tax credit (assuming you have the cash on hand).

You should not worry about your children's education costs now. Take care of your retirement first. Your children will likely qualify for financial aid if your income is low and if multiple kids are in college.

Its never too late to start saving.

Read this forum: Bogleheads

Watch these videos: Financing Life

Buy these books: Investing Guide and Retirement Guide

Live below your means. Save as much as you can afford in tax-advantaged accounts. Invest in a balance of low cost diversified index funds (both stock and bond). Stay the course.

germanpope said:   inform your kids early on that need to forget about college and start preparing for an early entry into the labor market so that they can care for mom

with four of them, even minimum wage should be sufficient to support you --- additional trade skills and you can do much better with them

 

(j/k)

You can bet I am going to start priming them for this. Though I will tell them they need to go to college and make very good money. I want a privileged life in my later years and they will give it to me. : )

JaxFL said:   needadvise said:   JaxFL said:   Dont invest in anything you dont have knowledge about, so no you should likely stay away from stock market. In the coming years Id want to stay fairly liquid. You should have 1 yrs worth of savings before you consider putting money anywhere else. You have small children and whatever you do put away likely wont be meaningful at this point.

Proper question would be how much do you want at retirement?
Estimate your return rate, years remaining to retirement, make calculation, and then make a trip to the liquor store.

I would like enough money that I could travel a bit and not have to eat ramen for dinner.

Funny, but I do this quite frequently as it is. : ) If you add some precut chicken or pork into it, its quite good. You need to add a few ounces of meat though. For those that know my rep, may seem predictable, but Id recommend you buy another property. Your home is paid for, youd maximize leverage - which is what you need at your stage, and itd make a good semi passive income in the future. Id do that before I ever put 10k into stocks.

So, would you still put 10 grand into the Roth? Or take the 10 grand and put it into flipping a house?

needadvise said:   
So, would you still put 10 grand into the Roth? Or take the 10 grand and put it into flipping a house? NO. NO. 10k into a rental home mortgage, 30 yr or possibly 20 yr. 20yrs later its paid for, is an asset (hopefully appreciated) and still provides a monthly return regardless.

jd2010 the baby boomers aren't to blame for all your problems, loser! Also the OP is not of the baby boomer generation anyway, so calm down. Her and her husband are doing better than most. They have a home that is paid for and they will have a nice income from a pension and social security.