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A Profile in Retirement Planning for Freelancers

retirement signThe Washington Post profiled a woman whose retirement planning isn’t perfect but is certainly more ideal than that of many. The interesting thing about this woman is that she is a freelancer. Without a regular salary and benefits, Barbara Southworth has managed to:

  • Pay off her mortgage
  • Save money through IRAs
  • Set aside an emergency fund for one year of expenses

She is also a cancer survivor and she has one year left until her car is paid off.

Southworth plans to scale back her teaching and other freelance work to focus more on environmental activism. She would also like to spend part of the year in Maine.

Some of her retirement planning concerns are:

  • Is it worth it to buy a home for her time in Maine?
  • Should she buy long-term care insurance?
  • Can she wait to collect Social Security?
  • Will her retirement income be enough if she lives as long as her 95-year-old father?

The Post worked with two financial experts to examine Southworth’s finances, lifestyle, and goals to help her determine what steps to take. Here is some of their advice:

  • Remember that doing a little freelance work might “create a taxable event for her Social Security benefit” once she starts collecting Social Security.
  • Consider buying a deferred/longevity annuity (these don’t start paying until one is over 80 years old.
  • Instead of buying a second home, consider renting in Maine and perhaps sell her Virginia home to increase her retirement nest egg.

All of us will not have the opportunity to be profiled by a newspaper but we have the ability to get retirement planning advice that is tailored to our individual situation. If you have read books and magazine articles that have increased your knowledge of finances but still aren’t sure what to do, perhaps it is now time to sit down with a Fee-Only financial planner.