My husband is self-employed. How should we start planning for retirement?
Retirement is a few years down the road for us, but we are not sure where to even start?
Answers | 4
I do not know how old your husband is, but the earlier you start saving for retirement the better. You can start a 401(k) plan and put away $18,000 per year and an additional $6,000, if over the age of fifty. However, that is only if he is drawing a salary of at least that amount. If he has an S Corp and is drawing minimal salary, his election is limited to salary. Unearned income cannot be used for pre-tax retirement planning. After tax contributions are limited to IRA contributions of $5,500 per year.
Before you start, perhaps a better question is to understand where you want to end up financially in retirement? Then, work backwards to ensure that you are staying where you need to be financially. When I was a kid (perhaps, I still am), my father (who did all the driving) made it a requirement that we knew where we were going and how to get there BEFORE he would start the engine. Certainly, we rarely traveled in a straight line and there were bumpy roads. We valued our time together immensely and focused on making the best of it.
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