Helping Your Parents Plan for Retirement

Time slows down for no one. Many Americans think it’s possible to put off retirement in their 20s and 30s while focusing on other priorities. However, once they get to their 50s or 60s, this procrastination can wind up leading to a major concern. Those who fail to plan for retirement in their first few decades of work will need to make up for lost time when they get closer to the traditional retirement age. If your parents are in this boat, you might want to help them navigate their options.

SEE A FINANCIAL PLANNER

Those quickly approaching retirement with little to no savings will probably want to see a financial planner. Planners have the expertise that can help people figure out how much they’ll need for the future. Additionally, financial planners can help future retirees with tax considerations so that more of their money can go toward investments.

TAKE ADVANTAGE OF 401K PLANS

Your parents might have access to 401k plans or other similar retirement accounts through their employers. If this is the case, they might want to start utilizing them if they’ve not already done so. Many employers contribute matching funds to help their employees build their retirement accounts. Many times, these employer matches are 50% or 100%. For example, an employer might match the first 6% of an employee’s salary on a dollar-for-dollar basis. This is free money, and it can rapidly increase your parents’ retirement accounts.

CONSIDER DOWNSIZING

Most people have some equity built up in a primary residence. This is a large percentage of many families’ wealth. Once people get into their 50s and approach retirement, they will likely have an empty nest. Those who own a house with five bedrooms while having no kids at home might find that selling the family home and buying a two-bedroom house could free up some cash to help with living expenses in retirement.

While it might seem that your parents have little time to plan for retirement once they’ve hit their 50s, it’s not impossible to build a nest egg. Accessing equity from a large family home can contribute to retirement savings. Additionally, those who are still working can benefit from saving more money in their retirement accounts. This is even more important for those who get employer matches. The additional free money can cause investment accounts to multiply more rapidly and lead to a larger stash for retirement.