So my mom is trying to retire soon, as she is 58. She currently doesn’t have a lot of money for retirement (about 100,000 dollars), but makes 250,000 a year and loves her job (which isn’t demanding on her body).
She is just now starting to save more, but doesn’t know if she should go with a self-401k (as she is self employed), or open an annuity with thrivant.
I have 0 clue as to what the best option is, so i REALLY need some help deciding on this. What makes the most sense for someone who is in her shoes?? Should she just aggressively max everything out? or should she go with the annuity?
Your mom’s situation isn’t just about choosing between a self-401(k) or an annuity; it’s a glaring wake-up call about her financial habits. Earning $250k a year and only having $100k saved by the age of 58 is a clear sign of living way beyond one’s means. It’s crucial she confronts the reality of her spending and saving patterns.
Retirement isn’t just an age you reach; it’s a financial status you work towards, and frankly, your mom isn’t there. With such a late start, she’s facing an uphill battle that requires drastic changes in her lifestyle and spending habits. The idea of transitioning from a high earner to someone who needs to live as if they’re barely scraping by might seem severe, but it’s the necessary shift needed to salvage a semblance of retirement.
She needs to embrace a severe austerity lifestyle now. This isn’t about temporarily tightening the belt; it’s about retraining her brain to live on significantly less, indefinitely. Every dollar saved now is a step closer to a future where work isn’t a necessity but a choice. She should be maximizing every possible retirement saving avenue, slashing unnecessary expenses, and seriously considering the longevity of her career.
Practically speaking, it might also be time for a reality check about what her retirement could actually look like. The notion of a leisurely retirement may not be in the cards. She may need to consider working as long as physically possible or finding ways to generate passive income, such as transitioning her business to be run by someone else while she takes a backseat.
Lastly, you need to set boundaries regarding your role in her retirement. If supporting her isn’t something you’re willing or able to do, it’s important to communicate that now. If you are considering it, it’s crucial to have a frank discussion about expectations, contributions, and financial management. Remember, retirement planning is about building a secure future, not just for her but for you as well.
Theodore Lee is the editor of Caveman Circus. He strives for self-improvement in all areas of his life, except his candy consumption, where he remains a champion gummy worm enthusiast. When not writing about mindfulness or living in integrity, you can find him hiding giant bags of sour patch kids under the bed.