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Saving for Retirement as a WAHM: 4 Questions to Get Started


Being a self-employed mom doesn't mean you can't save for retirement--and make that dream of leisurely wearing bunny slippers a reality. Here's what you need to ask in order to get started.
A retired couple sits on a beach together watching the sunset.

Whether working from home was always in the plan or it came as a surprise, retirement doesn't just happen, especially when you are self-employed. While saving for retirement may sound absolutely daunting as a work-at-home-mom, it can be done and it's not as tricky as it sounds. Here are 4 questions you need to ask yourself to start saving for retirement as a work-at-home mom.

When Do I Want to Retire?

For some, working without interruptions for diaper changes and ballet practice sounds almost like retirement in itself, while others may prefer to find their freedom all at once. Would you like to retire when the last little one is all grown up, or would you like to battle the empty nest feeling by staying busy with work? If you are married, would you like to retire at the same time as your husband, or work longer to save more? Since you are self-employed, your retirement age depends entirely on you--how much you can save ahead of time and when you are ready to live off that savings.

How Much Money Do I Need to Retire?

How much to set aside for retirement is a tricky question and depends on what kind of lifestyle you want when you are retired. Sure, you won't need to pay for any more little league equipment or new school clothes, but you might want to travel more often, go out to eat more often or enjoy hobbies like golfing or quilting. Consider elements like big bills that will be payed off by then, like the mortgage or student loans. Consider your living situation; will you be renting a retirement condo with less upkeep, but more monthly expense? Many financial representatives recommend saving 10-15 percent of your income. If you are self-employed, saving a percentage is usually easier than a set amount every year. Your good and bad years should even out and you won't have to worry about not meeting a specific dollar amount each year.

What Plan Works Best for Me?

There are a variety of plans when it comes to saving for retirement. The one that works best for you depends entirely on your situation and preferences.

If you don't have the time to manage one more thing, look into a SEP IRA. This is something you set up one time, and you can even set up automatic payments so once you get it going, you won't have to worry about it again. Within a SEP, you can choose between the a traditional IRA or a Roth IRA.

If your income is unpredictable use a plan to which you contribute one large amount at the end of the year, like a Keough plan. It requires more maintenance than a SEP IRA, but allows you to save up to 25 percent of your income up to $49,000 and is tax-deferred. You can start withdrawing once you are 59.5 years old without penalty.

If you don't earn very much, look into getting a Roth IRA, which is your best bet if you don't earn enough to benefit from the tax breaks of a larger contribution plan. You won't deduct the contributions every year on your taxes, but the fund is tax-free both as it grows and when you withdraw.

If you're still unsure what plan works best for you, consult a financial adviser, such as the person who prepares your taxes every year, an experienced financial adviser or even a representative at your local bank or credit union. Every situation is different, so it is always a good idea to chat first about options with someone familiar with the financial field.

What Else Can I Do to Save for Retirement?

Depending on your unique situation, you may want to do more than just set up one account. Here's some tips for planning for retirement as a work-from-home mom.

  • Work to pay off your mortgage or other large debts early so you are able to contribute a larger sum of money to your retirement fund in the future.
  • Make sure you and your spouse are on the same page. If you're married, you'll need to know what plans your spouse has in place for retirement. Talk about what age you'd like to retire at, what kind of lifestyle you would like and how you'll reach those goals.
  • Contribute what you can. Maybe you're just starting out and only take in a small income right now. That's okay--just save as much as you can. Set aside 10 percent even if it is only $10--as your business grows, you will be able to save more for retirement.

While your friends may think you lounge around all day, working from home while still handling the responsibilities of a mother is tough work--and a job that deserves a rewarding retirement. Consider when you want to retire, how much you'll need to retire, what plan you should use and any other little steps that can help you reach that big goal. Saving for retirement can be tough, but the sooner you start, the easier it becomes.

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