Financial planning for retirement should start early, especially if you hope to leave money for your kids or grandkids. But there are many ways to help out without taking control of your parents’ financial affairs. Here are some tips on how to help your parents financially while still saving for retirement.
1. Keep track of expenses
The most important thing to do is keep track of your family’s spending. If you’re worried about being too controlling, consider getting your parents involved in the process. They’ll probably appreciate it more than if you just did it yourself. You might also ask them to write down every expense they pay each month. This way, you know exactly where your money goes.
2. Find out what they spend
Once you’ve got a good idea of how much your parents spend, it’s time to find out where they’re putting those funds. Are they paying off debt? Saving for retirement? Investing? Do they have a 401(k)? A Roth IRA? Once you know where your parents put their money, you can make suggestions about how to better manage their finances. For example, if your parents have no savings account, suggest opening one up. Or maybe they could invest in index funds like Vanguard’s Total Stock Market Index Fund Investor Shares (VTI).
3. Understand why they’re not saving
If your parents are struggling to save, you might have to step in and help them figure out why. Maybe they think they won’t live long enough to retire, or they feel guilty because they haven’t saved enough. Whatever the reason, it’s worth understanding why your parents aren’t saving. Then you can work together to come up with solutions.
A Lot of Us Are Worried About Our Parents’ Retirement
Baby boomers are worried about their parents’ ability to live comfortably in retirement. More than half say they’re concerned about their aging parents being able to afford basic necessities such as food and housing. And nearly three quarters worry about having enough money to pay for healthcare costs.
The survey found that many baby boomers are already planning ahead. Nearly 60% of those surveyed had saved up some cash for retirement. Another 41% planned to start saving within the next 12 months.
But while baby boomers are taking steps to prepare for retirement, they still lack confidence in their financial future. Just under half of respondents said they felt confident about their financial situation.
And while baby boomers are optimistic about their long term prospects, they’re less certain about whether they’ll be able to maintain their current standard of living once they stop working.
How to Start the Retirement Conversation With Your Parents
The topic of retirement planning is one that most people dread discussing. But it’s important to start early – especially if you don’t know what your parents are doing now. If you haven’t talked about retirement planning, you might find yourself in a situation where you feel pressured to make decisions without knowing all the facts. In fact, research suggests that even though millennials tend to be less concerned about saving for retirement than previous generations, they still put off starting conversations about it.
So, how do you broach the subject? You could try asking them directly, but there’s no guarantee that they’ll actually answer honestly. Instead, why not write a “family love letter,” a document that lays out your priorities and expectations for your future together? You can use it to address some of the bigger issues facing families today, including healthcare costs, taxes, and retirement planning.
Here are three things to keep in mind when writing your letter:
1. Be honest about your own personal finances.
2. Make sure you include information about your parents’ current financial situations.
3. Keep it short and sweet.
Retirement Talks With Your Parents Can Still Be Tough
If you’re having trouble talking about retirement with your parents, don’t worry. You aren’t alone. In fact, it’s common for people to avoid discussing the topic altogether. But, there are ways to make conversations easier. Here are some tips to help you navigate those difficult waters.
1. Start early. If you want to start planning ahead, you’ll need to talk to your parents about what you want out of life once you retire. This might mean asking questions like “How do I plan my future?” or “What do I want to do with my life?” Once you know what you want, you can begin thinking about how to achieve it.
2. Make sure everyone understands expectations. When you have a conversation about retirement, it’s important to understand each person’s expectations. For example, maybe one parent wants to travel while another doesn’t. Or perhaps one parent wants to spend his or her days volunteering while another prefers working full-time. By understanding what each person expects, you can better prepare yourself for the discussion.
3. Talk honestly. It’s easy to sugarcoat things when you’re trying to have a good conversation. However, honesty is key to making a successful retirement plan. For instance,
Your Retirement Is Still Your Priority
If you’re planning on retiring soon, you’ve probably heard about how much money you’ll make once you stop working. You might even think about what you’d do with all that extra cash. But while saving for retirement is an important goal, don’t forget about your personal finances. If you want to retire earlier, paying down debt and building savings are critical steps toward achieving that goal.
Protect Your Retirement With Long-Term Care Insurance
LTC insurance helps protect your families against unexpected costs associated with LTC. A parent’s LTC insurance policy could save you thousands of dollars over the course of his or her lifetime. And it provides peace of mind knowing your children will be cared for if you should pass away before retirement age.
People who don’t protect themselves for LTC costs will pay dearly later. In fact, according to the Centers for Disease Control and Prevention, one out of every five people 65 and older requires some form of assistance due to disability.
A good financial advisor can help guide you through the process of selecting the best policy for your situation.
Times May Be Tough, but They Can Also Be Rewarding
A lot of people think that getting an extra $1,500 or $3,000 will solve all their problems, but it doesn’t. You know what does work? Saving money. If you are struggling financially, there are ways to make some extra cash even though times may be tough. Here are five easy ways to earn extra money.
#5 – Sell stuff online
If you have something lying around the house that you no longer use, sell it online. There are many different sites where you can list items like books, DVDs, CDs, electronics, clothing, toys, tools and furniture. Just make sure that whatever you want to sell is still under warranty and that it works well enough to be sold. For example, if you want to sell your old laptop, check to see if it has a cracked screen. If it does, you can probably just fix the problem yourself rather than trying to resell it.
#4 – Become a virtual assistant
This is one way to earn extra money without ever leaving home. All you need is a computer and Internet access. Some companies hire assistants to do everything from scheduling appointments, booking travel arrangements, customer support and much more. Companies usually offer flexible schedules and competitive pay rates.
#3 – Start a blog
Blogging is another great way to make extra money while working from home. This is a good option for those who write regularly because you can set your own hours and choose how often you post. Many bloggers find that writing about topics related to health, fitness, parenting, pets, food, fashion and beauty makes sense since readers are searching for information on similar topics.
Keep Your Retirement on Track by Working With a Pro
Retirement planning is one of those things that most people think about once they are already retired. But it doesn’t have to be something that happens just after you stop working. In fact, there are many ways to make sure you’re ready for retirement even while you still work. Here are some tips to consider:
1. Have a plan. You don’t want to start saving for retirement without having a clear idea of what you’ll do with your savings. Start by talking with your employer’s human resources department about your options. They might offer advice on matching contributions, automatic enrollment into a 401(k), or access to a pension plan. If you decide to roll over funds from another account, talk with your financial advisor about tax implications.
2. Make regular deposits. Even if you aren’t contributing to a traditional retirement plan like a 401(k) or IRA, you should still contribute regularly to a taxable investment account. This way, you won’t miss out on potential gains because you didn’t take advantage of compounding interest.
3. Take advantage of tax breaks. Many employers offer incentives to encourage employees to enroll in a workplace retirement plan. For example, if you participate in a 401(k) plan, you could potentially qualify for a federal income tax deduction based on the amount contributed. And if you contribute to a Roth IRA, you won’t owe taxes on earnings when you withdraw the money later on.
4. Consider investing outside of your workplace. If you’re self-employed, you can set up a SEP-IRA or SIMPLE IRA. These types of accounts allow you to deduct your contribution from your personal income rather than your business’ income.
5. Talk to an expert. Once you’ve got your ducks in a row, it’s important to find someone who knows what they’re doing. An experienced professional can help you navigate the complex world of investments, including mutual funds, exchange traded funds, and managed portfolios. Plus, he or she can help you avoid costly mistakes.
6. Stay healthy. As we age, our bodies change. Some changes are normal, such as weight gain. Others can lead to serious health problems, such as diabetes. By taking care of yourself now, you can ensure that you can enjoy retirement without worrying about medical bills down the road.
