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How to help your parents with retirement planning?

Most youngsters take the responsibility of taking care of their parents as they get old. What do you do when your parents’ retirement plan falls short?



Most millennials and working youngsters today have parents who are close to retirement age, many of whom do not have a sufficient nest egg to see them through their golden years. The responsibility for your parents’ care and comfort (as well as their debts) could fall on you if their retirement planning strategy falls short of their actual requirements.

It’s important for you to understand where they stand in terms of social security, pension funds and savings, so you can plan for potential expenses in the future. Whether they live with you, on their own or in a retirement community, you may need to budget and save today so your parents are comfortable and secure tomorrow!

What you need to know about your parents’ retirement savings

When you’re trying to help your parents with retirement planning, it’s crucial to understand where they stand. This helps you work out real solutions for issues like debt, healthcare and day-to-day expenses, in addition to providing them the financial independence and “space” they desire.

Offering a supplemental income source could not only wound their pride but also create a mutually harmful dependency. This is a larger risk if the reason for insufficient retirement savings is bad money management or unnecessary expenses.

Start by asking where they have parked their retirement nest egg, if at all. For instance, have they invested in:

  • Insurance?

Not just life insurance, but additional coverage for potential medical issues that arise with age. Long-term care insurance may be expensive, but a prolonged illness or disability could eat into their savings and your own!

  • Retirement funds?

Ask whether (and how much) your parents have invested in IRA and 401K plans. Help them make the most of contribution limits and tax breaks, even if they’re uncomfortable telling you how much they’ve saved.

  • Debt repayment?

If mortgages or outstanding loans are paid off, that’s one less thing to worry about later. If not, it may be time for gentle encouragement, so your parents aren’t saddled with debt when they’re no longer able to work.

retirement planning

A financial advisor can help manage your parents’ investment portfolio and rebalance it if needed. (Source)

Here are some effective ways to help your parents manage their finances and save for retirement:

  • Meeting an advisor:

A third-party financial advisor can not only look over your parents’ investment portfolio and rebalance it if required but also minimize any awkwardness they feel discussing finances with you.

  • Updating wills and trusts:

Get a lawyer to help your parents with wills, trusts and other estate planning documents. Existing paperwork should be up-to-date, and your parents should consider a power of attorney as well.

  • Maximizing their savings:

Encourage your parents to save as much as possible, making frugal living choices now so they have financial security later. Check their budget for unnecessary expenses that can be trimmed.

  • Boosting retirement income:

Delaying retirement by a few years, continuing to work part-time, making smart investments, and exploring business opportunities can all help boost income both before and after they retire.

  • Preparing yourself as well:

No matter how well you plan, there’s no way to guarantee that your help won’t be needed somewhere down the line. Plan your own finances and savings, so you can help your parents when they need it.

Early planning will help you prepare against the financial impact of their retirement if they can no longer care for themselves at any point. Even if it doesn’t feel like any of your business, you definitely need to consider your parents’ retirement plan and help them get it on track (so you don’t end up being it!).

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday, and NuWireInvestor. If you need help and guidance with traditional or alternative investments, get in touch with Rick.