How prepared are you for the future?
In my 20s, retirement was the least of my worries as it is with most people in those early years of trying to figure out what you want to do with your life, but now, at the young age of 41, I constantly think of my future financial blanket. It wasn’t until 6 months ago that I became really became intentional about my money specifically my retirement. Unfortunately for me, my mother’s health had declined significantly as she was diagnosed with Parkinsonism. My mom has battled this disease with no savings, retirement or long-term health care. She retired a few years ago and received very little benefits from the government. I have never quite experienced the term, “emotional rollercoaster” until this season of my life when my siblings and I had to formulate a plan to care for my mom including caregiver payments and her residence. I use the term “work together” loosely. There were shouting matches, tears, resentment, and unfortunately disengagement from a sibling. All the family meetings, yelling, and shameful thoughts I had experienced with my siblings have all boiled down to money or lack thereof. We all work full-time jobs and some even have two or three jobs to make ends meet. We are 7 adult children having to carry the financial “burden” through my mom’s supposedly, golden years. It’s not just her utility bills, mortgage, and doctor bills, but the majority of our monthly expense is due to the use of a caregiver. As my mom’s Parkinsonism progresses, a part-time caregiver will turn into a full-time caregiver. After months of additional bills, it all adds up to a financial burden for some siblings and more resentment starts to boil among all.
This all made me think about my future, my son’s future and our current finances. I could not fathom to see my son struggle with the difficulties that come with caregiving all by himself and no one to lean on for help with making decisions about my care or the financial load. Since then, I have made a financial plan for my future, my son’s education and my retirement and the plan is in full swing.
Protect Your Family
First and foremost, I applied for a 25 year Term Life Insurance through an insurance agent. As a warning, the process can take more than a couple of months depending on a variety of reasons. Please don’t cancel any other insurance policy before being approved. Your life policy should be between 10-12 times your annual income. This is one of the least expensive ways to cover your family in case of any unforeseeable deaths. The younger you when you purchase the insurance, the cheaper it is monthly.
The second step of my plan was not as easy as the first and can take a few months up to years to complete. I decided to pay off all my debt as quickly as I could and I was focused. I designed a budget every month assigning every dollar to a bill or debt. I became intentional with my money and allowed the budget to control my life. There was no eating out every day, shopping when I was bored, taking vacations with my son, or attending sporting events. I was determined to pay off my debt within as quickly as I could and establish a cushion in my savings account. After paying off my debt, I also established 3-6 months of expenses in my savings account. And then I moved on to the third step of my plan.
Plan for the future
The third step of the plan is the most rewarding and beneficial towards your future. There are two important tasks that need to be setup in this step. One is retirement and the second is your children’s education. I set up a retirement plan contributing 15% of my monthly income. If your company matches, that is great, however, still contribute 15% of your income. It may seem like a large chunk of change withdrawn from your account but at the end of the year, it will usually yield 5-12%. Imagine what that money would look like in 10-30 years when you retire. Check out a retirement calculator online to determine how much you will receive when you retire based on the amount you are investing. My favorite link is Chris Hogan’s RIQ calculator.
Despite my son’s young age, this is the best time to invest into his college fund. I plan to cash flow his entire college education if he doesn’t receive an academic or athletic scholarship to keep from opening any loans under my name or his. A 529-college plan is the best way to go for your little ones. Usually you could open the account through your bank or the same financial advisor you opened your retirement plan. The 529 plan is a low maintenance account that you have full control over with access to make changes twice a year. And most importantly, all contributions of a 529 plan are not deductible, meaning money taken out to pay for college will not be taxed. This allows the cash flow your child needs for his or her education.
There will be days you slip and there will be days Murphy Law comes knocking on your door, but remember there is a finish line. Stick with your plan. Think about your future and most importantly, prepare for your kids’ future.
Following these steps will take planning and collaboration with your spouse. Sit down together and come up with your own plan outlining the goals you want to establish for your future. Now is the time to assess and reassess your future plans for you and your family. Two years ago I never would have imagined my mom would be in the condition she is in. And just before her 70th birthday, her adult children are trying to figure out what we are going to do and how are we going to implement her plan. Let’s make a plan for our future so our children don’t have to be troubled with the our financial responsibility.
ABOUT THE AUTHOR
Isis Barron-Hutchinson is a working mom, has taught and coached at St. John’s School for 15 years. As an avid runner and Orange Theory member, Isis tries to stay healthy by working out and eating clean. She has an adorable 6-year-old son who loves to play sports and compete in 1 mile kid runs. They love traveling the world together and have become major foodies. Isis will launch her personal blog in January of 2019 depicting a mom and her son’s journey through sports, school, travel and laughs.