September 13, 2010

Retirement on One Income

When women find out that I am no longer working, they usually make a comment about having money for retirement is why they work.  It is almost as if they are saying to me that I am not saving for retirement by not earning an income.  This is not true.  I contribute to our family's financial well being by making conscious decisions about our money - finding ways to spend less on items that we need and thereby being able to save money.

When I "retired" from my former job, I had a small retirement fund. Right now it is at $14,000 and I quit contributing to it when I quit working.  Instead, we fund my husband's retirement account since it is matched somewhat by his employer.  So after working for 27 years or so, I came away with $14,000 in retirement.  I know, more and more working women are offered 401K plans from the start.  When I started working in the early 1980's, there weren't many retirement plans out there.  In fact it wasn't until the late 1990's when my employer began a 401K plan for his employees.

How we live now is how we plan to live during our retirement years.  We live conservatively and that will not change in retirement.  When you listen to any financial "expert" on a news program they give an outlandish amount, in my opinion, of what everyone needs to have in their retirement fund.  I know that we are living longer and that in turn will require more income in retirement, but when is it overkill?  Actually I think that a lot of parents are not only considering retirement savings but have included an inheritance amount that they would like to leave their children. 

We have estate plans in place if we would die when our children are young, but I have never included the plan to have more money than I need in retirement in order to leave my children an inheritance.  Our inheritance for our children is that we have and are going to pay for the majority of their college education and to also pay for a portion of their weddings.  Our feeling is that this "inheritance" at the beginning of their young adult lives is far more beneficial and gives them a head start than any inheritance later in their lives.

If a married woman wants to be home with her children and make a career at home, never joining the workforce, is she making a financial mistake which will lead to disaster in retirement because she has not earned an income?  I don't think so as long as she and her husband make good financial decisions along the way. 

I know there are families out there that have lost a lot of their retirement due to the Recession and there is a need especially if they are near retirement age to put more money in retirement.  I recognize that scenario.  I am talking about women who get married and want to stay home with their children but feel the pressure to work so that they can fund a retirement account. 

When did we get to this point?  I really think that if a woman wants to be home with her children or for that matter wants to be a stay at home wife without children, that if she and her spouse/partner make good financial decisions, that they will be just fine in retirement.  Being in the workplace is not for everyone.  Living below your means so that you can put money into retirement and other savings can happen on one income.  You just have to embrace a different lifestyle. 

When others are buying homes that have 4 or 5 bedrooms along with 3 bathrooms, you have to look at a home that perhaps has 3 bedrooms and 1 bathroom that is well within your price range.  When others are buying a brand new gas guzzler SUV, you look at a more modest priced used car.  When has comfortable living been equated with bigger and better?  When has retirement savings required two incomes?

It goes back to quality of life and being happy does not go hand in hand with a large income.  I cannot imagine being miserable in a job I do not like for the next 15 years in order to have more money for retirement.  I'm all for delayed gratification but not when it means I am unhappy for 15 years.  I would much rather live below my means and fund our retirement through my husband's retirement account and our cost cutting lifestyle in order to put more into savings. 

By the time we retire, our mortgage will be paid.  We have looked to the future and know the approximate amount of monthly income we will have in retirement and it is enough to live the conservative life we are presently living.  Honestly I could see my husband working a small part time job if it involved an area of interest such as continuing to coach cross country, but only if he wants to.

Living in a modest home, driving a used car and thereby living below your means will serve everyone for their lifetime.  Even though I am not earning an income, I contribute financially by making conscious decisions on how I spend our money.  Spending less, means saving more for an emergency fund, for savings and for retirement. 


Lyn said...

I enjoyed your article. I cannot work due to health. However, I think the principles you mention can work for a lot of people who make good incomes. There is no reason not to be able to put away $$ in the situations you mentioned. It's a lot harder living on a lower income, but it is what it is. I just do my best to be as frugal as I can.

Tami L. said...

I really like your blog. You touch on alot of the things I am interested in and enjoy. I have been a stay at home wife and mother since 1986 when my first child was born. My husband and I made that decision together and have never regreted it. We have had friends say to us "I don't know how yall manage on one income". We have not suffered and our children have not suffered because of it. We have always been smart shoppers whether it be for a pair of shoes to a appliance or a car. We are do it yourselfers, bargain shoppers, and couponers. We paid our house of early and also have a good 401K for when my husband retires. I am 48 and my husband is 52. We try to instill these lessons to our children. Don't be discourage by what others say about your choice to stay home. It is definitely a full time job. Keep up the good work.

Martha said...


My husband has always used the phrase "we do the best that we can." He has used it from day one of our marriage.


Maureen said...

I would never ever judge when or if a Wife or for that matter a Husband decides to stay home. I just know that in our case retiring early is not an option, our own fault as we left making some retirement income too late. I agree that the amount that we are supposed to have to retire on is over inflated, I am at present hoping to just scrape by.