Nanny Knowledge: Four Steps Towards Planning for the Future
Everyone needs to plan for the future, and nannies are no exception. But what does make this particular task more daunting for nannies is that there is no safety net of a company matched retirement fund or even the dependable knowledge that you’ll receive social security benefits in the future. In a nutshell, nannies need to take responsibility for their own futures, and make saving for retirement a top priority.
Retirement may seem a long way off now, but any retired person will tell you they have no idea where the time went. As we grow older, the years seem to go by faster, and before you know it you’ll be 65 and ready to indulge in some well deserved R&R.
But what are your retirement goals? And how much should you be saving each month to reach those goals? We’ve outlined four excellent ways you can start planning for retirement—no matter what that time of life looks like to you.
- Make a plan. Most financial experts recommend that retirees need 70 to 90% of their pre-retirement income per year to maintain a lifestyle similar to that of when they were employed. If you retire at 65, what will that look like for you? People live longer than ever these days, so saving for a retirement lasting 20+ years is a wise investment.
- Start saving. If you’re not already siphoning some of your earnings into a savings account, now is the time to start. Even if you can’t save as much as you’d like immediately (i.e. you’re paying off credit card debt or student loans first), start with 10% and be diligent about leaving it untouched.
- Open an IRA. Individual Retirement Accounts, aka IRA’s, are government approved retirement accounts that allow you to save money for retirement at a reduced tax rate. You can also check with your employer about making contributions on your behalf as an employee benefit—parents can fund all or part of their nanny's SEP-IRA up to a maximum of $5,500 per year.
- Get professional help. Thinking about saving for retirement can boggle the mind, and is one of those things that may be better left to the professionals. Consult an investment advisor to get your plan in place, and ensure that you’re on the right track from the start.
Planning for retirement can be daunting, but if you start saving and keep saving, your golden years may end up being just that.