AMES, Iowa -- Child care professionals often have difficulty envisioning a comfortable retirement because of self-employment, low wages or both. However it’s vital they include retirement planning in their financial planning, says Cindy Thompson, a family life and family finance program specialist with Iowa State University Extension and Outreach.
“The average wages of teachers and caregivers in Iowa child care fell below the federal poverty guidelines for a family of four,” Thompson said. “Income level is important, because it significantly impacts retirement savings. Researchers have noticed a particular drop in retirement savings the last few years in households below $35,000.”
About 46 percent of child care center teachers and 33 percent of assistant teachers have retirement accounts, while less than 15 percent of registered family child care providers have retirement accounts.
“The child care professional community is predominately women, who often live longer than men, typically earn less and, on average, have higher medical bills, which makes retirement planning even more important,” Thompson said.
“People who want to save for retirement need to start by living within their current means, spending less than they earn and keeping debt at a minimum,” Thompson said. ISU Extension and Outreach has a free, self-paced online consumer class called “Take Control of Your Money” that can help individuals learn more about reducing spending and managing finances.
“When thinking about how much money you will need for retirement, ask yourself two important questions. First, where do you want to live in retirement? Is there a family home that you’ll need to maintain, or will you move to either a warmer climate or closer to family? If you’re thinking about moving, you also need to consider affordable recreation and health care options,” Thompson said.
“Another important question to ask yourself is how you want to spend your time in retirement,” Thompson continued. “Volunteering, new hobbies, part-time work, travel and time with family or friends are all activities retirees enjoy, yet the cost of each can vary greatly. Knowing where you want to live and what you want to do in retirement will provide valuable insights into how much you need to save and what you need to do to reach your goal.”
For child care professionals looking for more information on retirement planning, ISU Extension and Outreach offers a four-hour class called “Planning Your Financial Future,” which explores money management concepts through a retirement planning lens. The series introduces participants to basic retirement concepts such as risk management and types of investments, and provides resources for additional information. For help finding a “Planning Your Financial Future” series, check the Iowa DHS Training Registry or contact any county ISU Extension and Outreach office to get in touch with a family finance program specialist.