28 Mar The Grasshopper and the Ant Redux
I used to be a grasshopper, you know, like the one in Aesop’s fable. It wasn’t that I didn’t work—I did. It’s just that after paying for rent, utilities and expenses, I considered that whatever was left over was mine to spend on whatever took my fancy. Not that there was ever very much to spend—as a teaching assistant, and then a young college professor and finally a legal secretary and paralegal, there wasn’t much left over after expenses. No matter—I was as free as the lilies of the field and the birds of the air, with absolutely no thought of the morrow.
Financial Challenges for the Self-Employed Free-Lancer
Then something changed. When I began work as a free-lance interpreter, it was the first time I had ever been self-employed. Previously, taxes had always been conveniently deducted from my paycheck, along with Social Security and all the other necessary evils. Owning nothing and having no tax deductions, I always blithely filed the EZ tax forms. Those were the good old days.
As my circumstances changed, I found myself channeling my inner ant. (See the fable again.) I discovered that my lifestyle had to be modified to reflect the way I made my living. In contrast with my previous regular paychecks, the amount I would earn varied from month to month –I could never be sure of exactly how much it would be. I had to estimate my income, though, in order to pay quarterly taxes. I found that I had to stop spending money on frivolous things, and began to put money aside for the proverbial rainy day. My goodness, I was frugal! I clipped coupons, I froze in winter and sweated in summer to save on utilities, I attempted to do my own dry cleaning (big mistake). There was no end to the money-saving devices I made use of to save a buck, particularly at the beginning of my interpreting career.
Why Think About Retirement Now?
All this penny-pinching wasn’t enough, though. I knew that sooner or later, I would have to think about actually investing for retirement. It all started one day when a good friend and I were talking about our respective jobs. I was telling him about what it was like to work as a self-employed interpreter, and about all of the traveling and scheduling I needed to do. Then he said to me; “When do you plan to retire?” Retire? Me? I loved my work. I loved everything about it, including the schlepping and calendar juggling, and all the rest. I remember saying something like: “I’ll never retire. I don’t have to. With this kind of work there’s no need to think about retiring because you can go on indefinitely.” But can you?
Can You Go on Indefinitely?
I don’t know if any of us free-lancers can just go on from day to day believing that nothing will ever come along and ruin our well-laid plans of interpreting until we drop right in the middle of a deposition. There are so many contingencies to be considered. The worst, of course, is the possibility of sustaining an injury or an illness that prevents us from working. There are other contingencies to fear as well, such as finding that there is less and less well-paying work to be found, given the state of the economy.
What I’m specifically concerned with, however, is that my skills may not remain as sharp and reliable as they are at this time. As we get older, we begin to lose the ability to remember those words and expressions that spring to our mind with such ease when we are younger. What is worse about this eventuality is that any mistake we make might adversely affect the life of someone else. It’s a scary thought.
What I Have Done
So now I am actually at the point of contemplating retirement. Not right away, not even soon, but in a couple of years. I am fortunate, because instead of just being frugal and putting money away in a savings account, I have been doing some very basic investing. It has not been easy, because I am practically an idiot when it comes to finances. (Hey, I’m a language person, not a math person!) When you start talking about money market accounts or CD’s (not the music kind) my eyes glaze over and my mind starts to wander to places that have nothing to do with money.
Be that as it may, I have been preparing for retirement all along. Among other things, I have a SEP (Simplified Employee Pension) IRA (Individual Retirement Account) plan. It’s like magic. You invest a certain amount every year, and you get a tax deduction! There are plenty of other ways to invest for retirement, and I have included a few sites below for further information.
I hate to sound preachy, but I do worry when I meet interpreters who are super professional in the courtroom, but totally slapdash when it comes to finances. I know a few who actually have plenty of work, but somehow end up living from paycheck to paycheck because of bad planning.
I’ll give you an example. I have a dear friend, about my age, who is also self-employed. She is very good at what she does, and she works hard—when she works. The thing is that she takes a good deal of time off, and also spends every penny she makes on travel, eating out, and expensive and time-consuming hobbies. When I listen to her talk about her exciting, fun life, I can’t help but envy her.
But then when I realize that she has nothing put aside to carry her through hard times, I remind myself that this kind of fun costs way more than I can afford. A week’s vacation and a couple of long weekends are the most I can spare from my busy schedule. Fortunately for me, my husband usually prefers quiet evenings at home to going out. My hobbies are ridiculously cheap (reading and music), and, at my time of life, extraordinarily satisfying and rewarding.
So I’m just about prepared for retirement. Not quite ready yet, but prepared—both financially and mentally. I have started to turn down assignments I think will be too fatiguing. I no longer relish the thought of a complex trial with all the bells and whistles. I’m starting to dread the prospect of a long drive to a far-off courtroom in the middle of nowhere.
What You Can Do
I know many interpreters who plan on working as long as possible. Great, just don’t bet on it. No matter what stage of your career you are in, you need to start work immediately on getting:
1) Health insurance. Some of you are fortunate enough to have a spouse with a “regular” job that includes insurance that covers you as well. If not, go to www.healthcare.gov. I don’t care if you’re republican, democrat, libertarian or extraterrestrial. You owe it to yourself to get covered. None of us is invincible.
2) An investment plan. For a good outline on investment plans for self-employed people, go to: http://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People. It contains a description of the various ways you can save for retirement and get tax breaks too. Then, if you are as investment-challenged as I am, find a qualified financial planner who can help you get started.
3) A good tax preparer. Find someone reputable in your area, and plan to stay with that person for the long haul. A really knowledgeable tax preparer can help you save money, and is totally worth the investment. In the company where my tax guy works, there is also an estate planner, so I can kill two birds with one stone.
Don’t be a grasshopper; be an ant!