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How did you learn about retirement?
So in a recent should I stay home when I have my baby or keep working conversation over on the bump, I was told a resounding keep working and you need to be saving for retirement. I am curious to know how you learned about retirement options. I have absolutely no idea where to start, neither my employer nor my husband's will "match" any contributions or anything like that .. they have never even offered a retirement account as an option. So would you go to your employer to start or create an account through some other way?
A little background, I am 24 and have been in my small business office job for 1.5 years, before that I have always worked as a server. My husband is 26 and a kitchen manager in a restaurant. My parents have no savings and did not teach me about such things - I think my dad has a 401k through his work but other than that they have no savings at all.
Where do people learn these things and where would you start? My husband's parents are also terrible with money (his dad doesn't work) although they do offer advice such as life insurance for the baby when he is born as apparently you can get better rates than as they get older.
Re: How did you learn about retirement?
If their parents were savers, they learned from them, otherwise usually from getting into programs at work, or reaching a point where you decide it's something you need to go out and look into for yourself.
If your employer doesn't offer retirement accounts then you'll have to look into options to invest individually. Mass Mutual has a great website with articles, tools to help you determine what risk you're comfortable with, etc. I'm sure others do too, this is just the one I'm familiar with - http://www.massmutual.com/
As far as whether to stay home or keep working, depending on your financial situation, sometimes it has little impact to stay home initially. You'll have to look at that for yourself - what would you put aside when working and after baby expenses? If you didn't put that aside for X years, how much of an impact does it make? Not sure what your situation is, just throwing it out there because it seems like I'm seeing more and more women are advised on the boards not to stay home when they want to, and have the means to. That's a personal decision.
BFP 11.8.12 * EDD 7.17.13 * MC 12.20.12
Whiskey Tango Foxtrot, over!
I learned from my parents and reading/ watching/listening to various money programs. Since your employers don't match, I would recommend opening Roth IRAs for both of you. You can each put in up to $5,000 per year and it will grow tax free. If it feels really overwhelming, you could just pick a target fund (based on your anticipated retirement date) at a low cost place like Vanguard or Fidelity. Since you are so young, it's okay to have most of your money in stocks, but it's a lot easier to just buy mutual funds instead of individual stocks.
Life insurance on a baby is kind of silly and, in my opinion, not necessary or worth the premium. My husband and I got a combined coverage of 1,650,000 in our late 30's and our premium is only $100 a month for 20 year term.
My credit union offers free appointments with a financial planner - maybe you could look into that.
I learned mostly from searching on the internet and what H tells me after he does his research. We're young as well (25) and I just opened a Roth IRA. The funds are already taxed and you're able to pull out what you've contributed without a penalty. You can contribute $5k for 2012 and have until April 15th. The idea is to invest these funds to earn interest/gains and grow your retirement savings. The Roth IRA is funded by money that has already been taxed, your earnings will be tax free and when you're 59 1/2, you can withdraw it- also tax free. HTH!
I think child life insurance is meant to cover funeral costs and the amount is very low in comparison to adult life insurance.
That said, I agree that it's not worth it.
My dad taught my sister and me about retirement. He oened up IRAs for us when we were 18 and began putting money into them on our behalf while were still in college.
Once we graduated and had jobs, we took over saving on our own.
For information/research you may be able to find a retirement FYI book on Amazon or Ebay for cheap...some titles to consider are:
Smart Couples Finish Rich by David Bach
Retirement for Dummies. This one will probably have all the factoid type stuff you need to learn in a simple format. Lingo. Terminology. Etc.
The David Back book is more about setting up a system and a plan.
The biggest thing is to not feel discouraged or overwhelmed. In fact, you are MILES ahead of many people in your age group and beyond. Always keep this in mind as you proceed.
Lastly, as a PP mentioned, life insurance is mostly used on children for funeral/burial expenses. Your priorities should be building up an emergency fund and retirement savings before you buy any life insurance on a child.
HOWEVER, if you have dependents, life insurance on yourself and your DH is a MUST DO. It should cover the amount of current and future outstanding debts, funeral/burial expenses, and a comfortable amount for the surviving spouse and/or child(ren) to live on. It can also cover college expenses for children.
Some people debate whether or not a SAH parent needs to have a life insurance policy on themselves. Personally, I think this is wise.
As a SAHM myself, if I died, my husband would need time to readjust to life. He would need to move closer to famiy or to find live-in help to care for the children while he worked (he travels for days at a time). Having to pay for this in addition to our regular expenses would be a burden both financially and emotionally. My policy isn't nearly as much as his is, but it would help ease the adjustment into life without wife/mommy.
And while we're discussing planning, if you have assets and dependents another wise action to take is to set up a will, power of attorney, and also a living will/health care directive for you and your spouse.
These documents tell where your assets go once you die, who gets to raise your children, who manages any money for these children while they are minors, allows someone else to sign legal/financial documetns on your behalf, and sets down your values/wishes for health care if you become incapable of making your own decisions. This attorney service will probably cost you several hundred dollars, but it's well worth the expense.