Don't leave it up to your kids: A retirement checklist for parents
- Nov. 13, 2023
- 3 min read
Types of retirement funds
Why estate planning matters
Methods of tackling debt
If you have kids, saving for your later years is probably competing with about a million other priorities like saving for college. But sacrificing your retirement fund and other financial preparations for your children's expenses could put financial stress on your kids later on. The latest United States Census found 4.4 million adults provided a total of $17.5 billion in financial assistance to their parents in 2020.
Set yourself and your family up for retirement success with these tips.
1. Build your retirement fund
A 401(k): A traditional 401(k) is an employer-sponsored retirement plan offered through your workplace. Typically employers will match some of your contributions.
An IRA: A traditional IRA (individual retirement account) is a type of account that you contribute to pre-tax. Or you could choose a Roth IRA to contribute after-tax dollars. You can use an IRA to supplement your 401(k) plan or open one on its own.
Whichever you choose, it's essential to start planning for your later years as soon as possible to take the pressure off of you and your kids. Time is your greatest ally as you build these funds.
2. Make a will
Estate planning is a difficult, but essential, part of preparing for your retirement. Start with your will to clearly outline who you would like your assets (savings, properties, etc.) to pass to after you die. Otherwise, your kids will be left to make decisions about your estate at a time that's already emotional and stressful.
Start planning and saving now to ensure you and your family are ready to enjoy your golden years.
3. Settle your debts
4. Manage your mortgage
A home loan gives you the ability to invest your savings rather than tie it up in a single asset. You may have paid off your mortgage by the time you reach retirement age, but if you haven't, be sure to account for the cost when you map out financial needs for your post-work years.
5. Don't forget your health and well-being
Physical and mental health should be a priority at any age. Retirement is usually accompanied by increased medical expenses and potential caretaker responsibilities for your kids.
Contributing to a health savings account (HSA), a tax-advantaged savings account that allows you to save and pay for qualified medical expenses can help mitigate some of those costs. Caretaking is a conversation you'll need to have with your kids. Tell them what you want, whether that's assisted living or staying in your own home. Find what works for you both and have a plan beforehand.
As you set yourself up for financial success during retirement, time is your greatest asset. Start planning and saving now to ensure you and your family are ready to enjoy your golden years.