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Don't leave it up to your kids: A retirement checklist for parents

What we'll cover

  • 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

When it comes to preparing for your later years, you have choices . Two common choices are:

  • 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.

Once you write your will , make sure to update it every few years or when personal or financial circumstances change. Your family may grow or priorities may shift, and you'll want your will to reflect that.

Start planning and saving now to ensure you and your family are ready to enjoy your golden years.

3. Settle your debts

By staying on top of payments, especially for high-interest debt like credit cards and personal loans, you can keep your financial future on track to avoid passing on debt to your kids. As you tackle your debt, you have choices:

  • The snowball strategy starts with your smallest debts and takes a slow and steady approach.

  • Debt consolidation can slim things down to just one payment and may reduce your interest rate too.

  • If you have some serious debt to manage, seeking professional help might be the right fit.

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.

Be prepared

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.

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