You’ve got to admit that at-home moms have special challenges when it comes to saving for retirement. Most moms who work outside the home can sign up for a 401(k), get the match and contributions are made automatically.
At-home moms must be much more deliberate. Even if your spouse participates in a workplace retirement plan, whatever you can add to the pot will make retirement that much sweeter.
But how to find the extra cash? I’m with ya, sister! Any new expense is a big deal for already tight budgets. So, let’s back up just a minute.
For your retirement savings plan to be successful, you need to be out of debt and have a solid emergency fund. That way, you have a secure foundation to build wealth that will last. And, you’ll be able to funnel more of your income into your retirement without busting the budget!
Once you’re debt-free and have that rainy day fund, you’ll have no trouble finding $100 a month for retirement. If you do that for 20 years and your investment grows at 12%, you’ll have added nearly $100,000 to your retirement fund. But, I bet you can do better than $100 a month.
Why 12%? Good question. Dave Ramsey, money-management expert—I’m a fan who’s blessed enough to work for him—uses a 12% rate of return because it is the actual, historical growth rate of the S&P 500, a commonly used indicator of stock performance. You can try different amounts and rates of return using his investing calculator.
Suggestions To Make Some Extra Cash
Obviously, couponing is a great way to save some serious money, and Money Saving Mom® can teach you everything you need to know. Track your savings and direct that money to your retirement fund.
More ways to save:
- Adjust your spouse’s withholding – The average tax refund this year will be about $2,800 according to the IRS. That’s $233 that isn’t coming home in your spouse’s paycheck. Adjust the withholding and send the savings straight into your Roth.
- Insurance – Insurance is necessary, but it doesn’t have to be as expensive as you think. Shop around, raise your deductibles, and combine policies to get the best deal.
- Utilities – Energy-saving solutions are often money-saving solutions. Use a smart power strip that stops drawing electricity when appliances are turned off, raise or lower your thermostat by one degree to lower your power bill by 5%, and run the dishwasher and wash clothes only when you have a full load.
- Phone, Internet and TV – Bundle services for a better deal, drop premium cable channels, and get rid of costly extras like internet service on your cell phone, or just negotiate a lower rate.
Part-time work is another option. As a spin on the traditional work-from-home suggestions, my list includes services that, as a work-outside-the-home mom, I would totally pay for if I had the money. I’m guessing other moms would, too.
- Tutoring – The hairy, scary stuff—algebra, chemistry, calculus—Stop! I feel dizzy.
- Gift packaging – Some people have the gift of making gifts look good. Wrap birthday and Christmas presents, assemble gift baskets—who knows where this could go?
- Party planning – Got an eye for detail and a nose for bargains? Of course! You’re a mom! Party on!
- House cleaning – I know—as if you didn’t get enough of this at home. But it is a viable way to get some extra money if you’ve got the drive to do it.
More good ideas you don’t need me for:
- Home-based customer service agent – There are several options here. Just search online for home-based customer service companies.
- Freelance – It’s not just for writing or graphic design. If you have skills in foreign language, software development or administrative support, you can freelance. Again, a quick internet search will turn up lots of job opportunities.
- Sell stuff – Dave recommends this all the time for paying off debt, but it works just as well to raise extra money for your retirement fund. You can sell online or with your local consignment shop.
- Blog – It might take some time to see any real money from blogging, but it’s certainly a viable way to bring in an extra $5,000 a year. Successful bloggers are happy to share their secrets, so there’s no shortage of guidance or inspiration.
- Consult – If—in your life before kids—you gained some valuable and marketable skills, you can earn a significant income as a consultant. Start by checking out consultant job listings on any job listing service to see what companies are looking for.
- Nurse on call – Licensed nurses can make great money providing phone-based triage and medical information for pharmaceutical companies, insurance companies or other medical organizations.
I can’t stress enough the importance of watching out for scams as you pursue your work-from-home career. You should not have to pay to get a job, and the hiring process should be similar to the process for a work-outside-the-home job. Be careful!
Here’s What To Do With Your Extra Money
The best way to invest for retirement is with mutual funds in a Roth IRA (or a Spousal IRA), because when you retire, you get to withdraw from it tax-free. Even income from a 401(k) is taxable when you retire, so a Roth gives you a lot more bang for your buck.
If you and your spouse file a joint tax return, you can contribute $5,000 to your own Roth IRA—even if you don’t earn an income. That $5,000 a year, earning 12%, will grow to more than $400,000 in 20 years. Keep it going for another seven years, and you’ll have $1 million—as a stay-at-home mom!
Another equally crucial component of a successful retirement plan is your dedication to continuing your savings for the long term. Retirement is for retirement, not for emergencies. That’s why you built up your emergency fund before you started investing.
It’s also important to work with a professional when you open your Roth and select your mutual funds.
The best advice I can offer is to tell you to tackle this issue with the same intensity that you’ve used to attack other financial issues for your family. One thing I know, Mom can get it done!
If you would like to learn more about retirement saving and planning, Dave Ramsey has a free service that can help you find a trustworthy investment advisor in your area. Find out more here.