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Parents retirement planning—or the lack of it—can significantly impact their children’s financial stability. If your parents have their finances sorted to outlast their post-work years, then you’re in a rare league of adult children free of parental retirement worries. According to a 2020 AARP report, one in three adult children currently contributes to the finances of their aged parents after retirement. With the uptrend in economic uncertainties, covering your own finances can already be a burden—adding parental support to the mix can be overwhelming. An online community of young adults discusses the best paths to ensuring parents’ retirement does not become a financial nightmare, and we consider these submissions the most thoughtful.
1. Open Conversation Is the First Step
Starting can seem awkward if you’ve never had a conversation about money with your parents. However, many contributors say it is the first step to understanding the size of their current assets and liabilities.” You just have to talk about it,” someone insists. “Better to address the elephant in the room than wait until it’s too late,” he concludes.
2. Calculate Their Retirement Expenses
The conversation draws you into the current standing of their finances and, having to assess the situation, thoroughly evaluate what they’ll need to survive 20 post-work years. “Jump on an Excel sheet and together with them calculate their expected expenses to include healthcare, the daily cost of living, as well as potential emergencies in the decades after retirement,” one person suggests.
3. Guide Them on Retirement Savings
Many about-to-be retirees do not understand how to get the best out of their retirement saving vehicles like the 401(k), IRA, and pension plan, which could be a nightmare if left too late. A man says he insists on his parents contributing consistently to the pension plan and maximizing employer catch-up.
4. Get Started on a Budget
If your parents haven’t embraced the frugal life, it may be time to do so, an individual points out. “Guide your parents to create a realistic budget that aligns with their retirement income. Without budgeting, saving enough for retirement isn’t likely.”
5. Encourage Phased Retirement
Many contributors think phased retirement can be an option. “Encourage them to speak with their employer about phased retirement,” someone explains. A second person says her mom had an employment contract that allowed her to decrease working intensity over a longer period (than usual) until they finally retired. “It boosted her savings and made it easier on me,” she finalizes.
6. “Health Is Wealth” Isn’t a Cliche
One community member says that failing health takes the most money post-retirement in her experience. Several others mention Medicare, supplement insurance, and long-term care coverage as necessary when planning for a problem-free parental retirement.
7. See What Benefits Your Parents Qualify For
From HUD public housing to mortgage and reverse mortgage assistance, your parents could have some housing benefits that are unexplored or off their knowledge radar. Qualified applicants are usually 50 years or older, and you may be cutting enormous costs off housing if you help them take advantage of it.
8. Seek New Income Sources
If your parents are already retired, it’s less likely any saving model will help. While some people may be unqualified for the standard employment model, opting into the gig economy can provide additional income.
9. Get Other Family Members Involved
Siblings can be a great source of hope and support, and many people want you to involve them in the planning. “Other than the possibility of shared responsibility for your parent’s retirement care, your siblings may have different ideas on how to help,” one adult child implores.
10. Think About Your Retirement
You likely feel compelled to shoulder your parents’ post-work financial responsibility by choosing to bankroll them, but several people say you must prioritize your retirement above all else. “While it is natural to want to step in and help your parents with the money they’ll need, it is advisable that you set clear boundaries,” someone adds quickly. You mustn’t over-commit if it means sacrificing your personal finances.
Source: Reddit.
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