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Monday, August 04, 2008

A Dollar a Day

The Targo and I started working - outside of a university setting - a little bit later. We'd both been working full-time, but as research assistants/associates, we had no benefits outside of the university's healthcare. Once we left the university for full-time positions elsewhere, we both began contributing to retirement accounts.

This was a whole new world of thinking to me. I had typical blue color Midwestern parents who worked 30+ years and the same job, and in my mom's case, garnered pension. They didn't really plan for retirement. And now, of all the recurring nightmares I have, their living in the poorhouse is the scariest.

The Targo and I live pretty frugally. I know it probably seems otherwise with our trip to Italy and the bajillion baseball games (again with the grad student discount and the 1/2 price nights!). We try not to eat out (which is more challenging in Chicago than you can imagine), and rent way below what we could afford (it's very very small too), and drive an 8 year old car. When Nathan came along, we negotiated with work, friends, and family so that we could go six months without paying childcare, yet still bring home a full-time paycheck (for three months).

My point, it's buried in here somewhere, is that we've been discussing what might happen if we have a second child. Would I be able to work at home? Would work agree? Would it be possible with a toddler and an infant? Or, would I stay at home for a while? Our best case scenario would be for me to stay at home with two kids. That brings up the stressful - OMIGOSH, CAN WE AFFORD IT? I'm mostly worried about my age and our retirement savings.

I hate to even think about it, but what if something happened to The Targo, or our marriage? I think I would need something "just in case", which I know sounds horribly pessimistic. I just don't want to be in the position my parents are in now: working retirement jobs with no benefits because they didn't properly save.

So, question for you stay at home, or possibly going to stay at home moms, did/do you save for retirement separately from your husbands? Did you plan this on your own, or seek help (advisors, etc.)? Heavy thinking on a Monday morning.


Anonymous said...

My husband and I each have our own Roth IRAs. With any IRA, only you have access to it. Just make sure you contribute equally to each IRA and invest in the same mutual funds so the accounts are equally. And you get all the fun tax breaks. If you have 401k's, follow the same idea. Also, make sure you have a life insurance policy for both of you. This way your protected all around.
p.s. First time commenting, but I read your site all the time. I have a new baby and a crazy cat, so I relate :)

Anonymous said...

Hey, girl! There were a lot of reasons as to why we decided to have me stay home with Lovely Daughter. The most important reason was we know this was best for her, the secondary reason was my entire salary would have been spent on childcare, while I had the *pleasure* (ahem) of working full-time and having Lovely Daughter in childcare for 8+ hours a day.

So, we changed out whole lifestyle - bought a smaller house, live frugally (we did anyway), and we are so thrilled we did.

SSU said...

We decided before we got married that when we had kids I would stay home. So, before AJU5, I made plans to be able to work from home by teaching online classes for the local community college. Since I will still be teaching at least 8 credit hours a term, I will still be contributing to the state education pension account. My husband has some sort of pension thing plus a 401K at work. The big thing we did was when we bought our houses was to make sure that the basics could be paid for with just his income. Then my income could go to savings, entertainment, etc.
Maybe before you start planning on #2 you can talk to your employer and/or find a job where you can work part-time from home?

Becca said...

I have no advice, but I will be reading the responses. We are both covered with life insurance--enough to cover Ryan's salary plus childcare plus the mortgage if he dies and enough to cover childcare if I die. We are like you guys and are just starting to figure all this out now that we are out of academics. We do contribute a lot to his 401K at work and he has a Roth IRA. And we save a chunk every month for an emergency fund. If I get a paying job anytime soon, whatever is left after day care is going straight into college or retirement, or both.

Nilsa S. said...

I think that's a really difficult decision. And the *right* decision is different for every individual. Every couple. Every family.

For me? I have to work. We cannot live on my fiance's salary alone. And I need the adult interaction. However, when we have children, I like to think I will serve as a role model for them. Showing them that both parents can contribute to the happiness and future of a family.

Good luck with your thinking.

Shannon said...

I first want to say that I so admire working moms, whether it is in the home or outside. I know first hand how hard it is and you all need a big pat on the back. You rock! My husband and I both have Roth IRA's. He started his way before mine so his is much larger. But if the absolute worst were to happen, you would be entitled to half of his retirement in the divorce as he would yours also. It is Illinois law and I imagine most other states as well. You guys are still very young, so you are definitely on the right track and have plenty of time. One thing we haven't started saving for is college. But it is on our to do list. It sucks being an adult sometimes. :)

Shannon said...

Oh and I also wanted to say that we do our IRA's through Fidelity. My husband is into all that stock and mutual fund stuff so he handles all of it. All I know is buy low and sell high!! I am pretty sure Fidelity has some great advisors that could help you get started. And no this is not a paid endorsement for Fidelity. hehehe

Bailey said...

I've been thinking about the same topic a lot recently, what with the addition of the little one rapidly approaching.

My husband and I both have some sort of individual retirement accounts. I've had an IRA for several years now and he recently set up a mutual fund (I think? I kinda glaze over when the talk turns to savings.. I know, it's horrible). We also got life insurance a few months ago. A good friend of ours has a State Farm branch so we went to him for the mutual fund and life insurance. I also have my own 401k through work but that will get rolled over into my IRA soon.

I will be a SAHM soon simply because my salary is not enough to jusitfy working (sad but true, who wants to work 40 hours weeks to hand their entire paycheck over to child care). This hasn't been put into practice yet so we'll see how it goes.

But of course, what we've got planned may not work for all.

Leslie said...

Here is what I know, and it ain't much. My hubby and I both have 401K's that we contribut the max amount to. I am understanding that the only way they "pay off" is if you stay at ajob for more that 5+ years. That leaves me out. As a nurse I get recruited all the time and usually change around 9 months at any given job. Sounds bad but with the nursing shortage it is not uncommon. Because of this my hubby and I also have Roth IRA's. We have a college fund set up for Maddy already (I know she is only 3). We have also put our house and other $$ into a trust fund for her, which should double every 7 years if we just let it sit.....which we do. That should put her roughly at....well its tacky to say, so I will just say that HER retirement will be a million times better that mine......pun intended. I worry about OUR retirement, but I am more worried about my Maddy, so everything we do is for her. From life insurance, to short term disability.....we both sign up for it all and take the max with her as benificiary. We might be wrong and I might be talking out of my head, but I do sleep better at night! Oh and yes, I did seek my dad as an advisor....he's the best! And a huge Cards fan.....can't go wrong there! Goodluck!

Leslie G.

Ree said...

Save separately! Save whatever/wherever you can. Take advantage of "free money" (special incentives for matches, etc.)

Kristabella said...

I'm thinking if you have two kids and you CAN stay home with them and you WANT to stay home with them, you should. As for the retirement thing, you could always take some odd jobs and put that money into an IRA or something for retirement. There are options. My half-sister is working at a company that can help you out with that, if you're interested. :)

L Sass said...

Money sucks.

But, it sounds like you are on the right track Even though it is scary to imagine, I think it's wise to have your own emergency fund, especially if you're going to be out of the work force for a period of time. So many women who stay at home feel powerless because of the economic imbalance (perceived or otherwise) with their spouse.

I don't have any good advice from where I sit, but I think you're thinking all the right heavy thoughts!