Question for the Money Doctors
Question submitted on May 8, 2012.
QuestionI am recently divorced after 22 years of marriage. I have no retirement in place, however my ex has a good retirement to which I was entitled to 50% through the divorce but I chose to only accept 25% of that which will come to about $16,800.00. My current income is aprox $17,000-$19,000/year.I only have $1700 in debt but will be needing to buy a car within the next year. What amount should I be saving each month to ensure that I am able to support myself (not lavishly but comfortably) in my retirement years? Also, what is the best method of saving this money? IRA? CD''s? Investments? I know very little about any of these and need some advice.Thank you in advance.
Not knowing all the pertinent details of your situation such as your age, your remaining working years, expected income during your working years, anticipated social security, and your anticipated income needs in retirement, it is not possible to give customized advice for your specific situation. However, the following items should get you on the right track.
Start by determining how quickly you can payoff your remaining $1,700 in debt since you will be purchasing a vehicle soon. I am guessing you will most likely be financing your new transportation and don't want to have 2 obligations. Then, make a determination as to what your expenses will be when you retire. Factor 3-5% increase annually from today for inflation. You will have the retirement from your ex-husband and social security as income, so will these cover your anticipated expenses, inflation adjusted? Either way, you will want to save as much as you can afford to so you have a cushion. Depending on your tax bracket, either a Roth IRA or IRA would make sense, presuming your employer doesn't have a plan with a match component. Consider a CPA, PFS in your market (www.findaPFS.com) if you need a detailed plan specific to your situation.
For additional information visit http://www.360financialliteracy.org/