Preparing for Retirement While Financially Supporting Children
Whether your kids are in college, living on their own, or are still at home when you reach retirement age, finding a way to balance the cost of supporting kids today and saving for a comfortable retirement often requires parents to manage quite the balancing act when planning and saving for retirement.
Here are some tips on how to create a solid retirement plan that benefits the whole family and helps you stay on track with your retirement goals.
The Family Plan
First, think about your lifestyle before and after kids, track spending, and map out a long-term financial plan for your family as early as you can. Don’t worry about coming up with “the perfect” answer. Just make sure you review your plan yearly and adjust it to your current situation. A plan will help you figure out what kind of lifestyle you’ll be funding while still saving for retirement. Consider asking yourself:
- At what age do I want to retire?
- How many kids do I want to have?
- What are our income sources?
- Will my kids go to college? If so, how will it be paid for?
The Retirement Plan
Map out your retirement plan: Lay out your anticipated expenses during retirement, set retirement income goals, and list the steps you are going to take to get there. Keep the following in mind when setting up your plan:
- Pay yourself first! Include contributions to your retirement in your family budget like you would groceries or insurance.
- Factor in how you are going to pay down debt before you go into retirement. Many experts believe that paying down debt is the only good reason to save less. You may want to talk with a loan officer about making a plan and consolidating your debt.
- At a minimum, take advantage of any employer 401(k) plan, or retirement plan options.
- Consider retiring later in life. Run the figures to see just how much 3, 5 or even 10 more years in the workplace will give you.
Acting on Your Plans
Anticipating some of the needs you and your children may have later, will help you plan better. Here are some things to think about as you put your plans into motion:
- Have talks with your kids about money and your plan for them early. Be very clear about their responsibilities and educate them on how to be financially responsible.
- Schedule regular reviews of both plans, making sure you’re on target and adjusting for any unexpected circumstances.
- Start a college savings fund for the kids as early as possible.
- Consider buying life insurance for your children early. This is another way to provide some security for them while taking advantage of lower premiums. It also ensures they have guaranteed insurability when they are older.
If we can help you in any way, don’t hesitate to give Bank Midwest a call and schedule an appointment!