How to plan for retirement for two in a single income household

Since the children are now working adults, job loss does not pose a threat to the household budget.

I recently interviewed a former colleague whose position was terminated after working in an institution for 31 years. Was she sad? Far from there!

She was somewhat disappointed to quit her job just eight years before her scheduled retirement. The dismissal has created new opportunities for this pre-retiree. Living in a two income household has many advantages, but now his household is down to one income. But how many households can make do with just one income after having relied on two incomes for decades? My former colleague wanted to share her story with me. After hearing an interview I did on the air recently, she got in touch to discuss her investment plans for the future.

Savings habit

She had always been a savior. At 23, she got a mortgage for her first home, a studio. She then got married. Her husband also had a mortgage for a house. Together they bought a family home and rented out the other accommodations. They continued to save for their children’s education and retirement by contributing to formal pension funds and investing money for long-term goals. Life insurance needs were also covered.

Opportunities after layoff

The severance pay was used to pay off credit card debt, a car loan and a mortgage for the family home. The rest is intended for long-term investments. My former co-worker settled her apartment mortgage 10 years ahead of schedule by paying off the principal of the mortgage during her working years. Each month additional payments were made on the mortgage, allowing her to pay her mortgage in advance, resulting in huge savings. She is currently debt free. Her husband, currently the sole breadwinner, has agreed to cover all household expenses. The household also derives income from residential properties acquired through inheritance. Since the children are now working adults, job loss does not pose a threat to the household budget.

New projects

Having been forced into early retirement, passive income replaces her salary. Aware that she will likely spend many more years in retirement than expected and that inflation will impact the purchasing power of her pension, new ventures are now being launched. The loss of a job gave him time to think about his future. . She started backyard farming and takes on a big farming project to grow peppers on a property she owns in a rural community. Drawing and painting are his hobbies, so more time is now spent honing his skills and researching the commercial viability of selling his paintings. An animal lover, she decided to raise birds and has already found a market for this business.

She is reluctant to return to the mainstream labor market and is now self-employed as a referral agent, using her training and skills from her previous job.

Advice for single-income households

1. Be disciplined in your spending. Do not live beyond your means. Make a budget.

2. Self-Investment — Personal development is especially important. A parent or stay-at-home spouse should consider learning or perfecting a skill. Continue your education. You can simply return to work in the future or start your own business. Marketable appointment. Earn from your skills. Find a need that others will pay you for and fill it.

3. Set up an emergency fund. Plan for unforeseen expenses, such as repairing a motor vehicle; unexpected medical expenses and home or property maintenance. While both parties are working, an emergency fund should be built up over time. Ideally, up to nine months of living expenses should be the goal. In the event of job loss, the emergency fund becomes an appropriate coping mechanism, especially if the job loss is unexpected.

4. Reduce debt and/or pay down debt. The less debt you have, the more you are able to save and invest.

5. Decide who will be responsible for managing household expenses or financial obligations or how responsibilities will be shared. Have adequate life insurance for each spouse, not just the breadwinner.

6. The breadwinner should maximize pension contributions. Continue to save and invest regularly. Small amounts add up. It was George Foreman who said “the question is not at what age I want to retire, it is at what income”.

Grace G McLean is a Financial Advisor at BPM Financial Limited. Contact her at [email protected] and visit the website: She is also a podcaster for Living Above Self. Email him at [email protected]