A reader worries about getting back into the job market after her youngest son moves out.

3 minute read

Question: My youngest starts college this fall, and I’ve just recently started working again. (My husband and I scrimped and saved so I could stay at home and raise two boys.)

You might think hubbie and I would be celebrating our new-found freedom, but instead, I’m worried about our retirement. While he has a decent 401(k), I was out of the workforce for two decades. Now that I’m working again, I’m trying to build up my own 401(k). But my balances are so small, I don’t know how I’m ever going to catch up. 

Any advice, Howard?

— Cynthia in Oregon

Howard Dvorkin CPA answers…

I got your email only a few days before I read a sad report from the TransAmerica Center for Retirement Studies. You’ve probably never heard of the place, but they do amazing research.

What they found just this month…

  • Only 12 percent of women are “very confident” they’ll “fully retire with a comfortable lifestyle.”
  • A whopping 56 percent of women plan to retire after age 65 — or not at all.
  • 81 percent of women are concerned that “Social Security won’t be there for them when they are ready to retire.”

The scariest numbers of them all: “Women estimate that they will need to have saved $1 million  in order to feel financially secure in retirement.”

So now that I’ve terrified you, let’s talk about your more pleasant options. For starters, you and I spoke after I received your email, and there’s some good news: You have precious little credit card debt. You and your husband are carrying a balance of $1,700. So the first step is to pay that off.

How does that affect your retirement? Well, the interest on that $1,700 is going to a credit card company instead of you.

Second, both of your sons are in college but fortunately, you (and they) made the smart choice of attending a local community college for their first two years — something I suggested to another reader years ago.

Third, you had long ago purchased a 529 Plan for your sons’ education. So simply put, you don’t have to choose between your children’s education and your own retirement. I hope all the younger couples reading this take note.

What you need to do from now on

With these wise fiscal decisions behind you, let’s look ahead…

1. Consider downsizing. Once your youngest son is out of the house, can you move into a smaller house? The difference between selling a big house and moving into a small one can be directly invested for your retirement. Plus, you’ll save on everything from insurance to heating and cooling costs.

2. Go high tech. You sound like a responsible couple, but I’ve counseled older couples who still budget with paper and pen. Try a free online budgeting tool, which allows you to experiment with moving money around and seeing how the savings add up. My personal favorite is PowerWallet, which is why I partnered with them. But there are many others.

3. Join AARP. I have no connection to the organization, but I recommend it simply because it focuses on retirement issues I don’t have the space to explore here. Check out what’s available for free online, and consider joining if you think you’ll avail yourself of the AARP discount programs, which can total more than the annual membership fee.

Bottom line, Cynthia: Retirement is a scary financial situation for many Americans, but you’re positioned better than most. Keep doing what you’re doing.

Have a debt question? Can’t find what you need to know? We can! Submit any debt or finance question you have, and we’ll tap a pro who will respond as quickly as possible.

Get AnswersCall To Action Link
Did we provide the information you needed? If not let us know and we’ll improve this page.
Let us know if you liked the post. That’s the only way we can improve.
Yes
No

About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC