GIVE YOUR KIDS THE GIFT OF FINANCIAL SECURITY IN RETIREMENT. MY TOP TIPS TO MAXIMIZE YOUR PLAN IN 2025.
The greatest gift you can give your kids is not the stuff of the holiday season. (Though they may tell you otherwise!)
It’s not even the gift of a once-in-a-lifetime trip or other unforgettable experience.
“The best gift you can give your kids is for them to know that you are taken care of in retirement.”
I’ll go one step further. The absolute best gift is to have an honest conversation with them about your financial situation as you near retirement; to organize financial documents, numbers and contacts; and to share your end-of-life wishes. (Keep reading for helpful tips on how to organize your financial information.)
So put aside the money, gifts and good intentions. Because at the heart of it all, what your children and loved ones really want is security—to know that you have a plan in place (and on paper) to cover housing, bills and daily necessities throughout your later years.
Recent findings, however, reveal many people nearing retirement are in a much different place.
An AARP survey, for example, found that 20% of adults ages 50+ have no retirement savings.
Sadly, more than half (61%) are worried they will not have enough money to support them in retirement.
Failing to plan for retirement weighs heavily on adult children.
“Venting because I am just so angry. My parents were irresponsible in saving for retirement and ended up with SSI as their only means of income. … The thing is they could have had a sound retirement as my father made a very good salary. … He told me he never thought his health would be bad and that he'd be working forever! My mother, when she was alive, said she never thought about the future.”
– Caregiver Forum, agingcare.com
Avoid putting the burden of financial uncertainty on those you love. Financial preparedness in one’s “golden years” is the greatest gift you can give to your children. Start by …
MAXIMIZING YOUR RETIREMENT PLANNING STRATEGIES HEADING INTO 2025
Here are my top recommendations.
Continue to fund your 401k; increase your contributions if you can.
This is a great long-term way to save for retirement, benefiting you now since you get a tax deduction, and benefiting you later by consistently adding to and growing this type of account for retirement.
If you’re able to increase the percentage you put toward your 401k every year or every other year, even better. You’ll put more into the retirement-savings pot without feeling too much of a cinch in your pocketbook. Some 401k’s even offer an automatic increase program, so it’s increased by 1% annually, unless you opt out of it.If you have extra money outside of savings and your 401k, this is when you can and should bring in a financial advisor to develop a strategy to manage and grow those funds.
If you’re at the point where you’re able to do this, I encourage asking friends and coworkers and colleagues for a personal recommendation.Remember your Roth 401k/Roth IRA as a secondary or split percentage vehicle to contribute to, if you’re able.
A unique aspect of this type of retirement account is that the growth on these dollars is tax-free on the withdrawals during retirement. It’s another way to split the percentage you’re contributing to in your company’s 401k, if the Roth option is available, or have as a secondary savings vehicle as an IRA that you would own personally outside of a company plan. There are some income thresholds and particular IRS rules regarding Roth IRAs though, so consult a financial advisor to discuss your personal situation before moving ahead.
Organizing your financial documents is just as important as building a strong retirement plan. Look at it this way: You could have millions of dollars in the bank and in other assets, but if your loved ones don’t know where they are or how to get to them, the money isn’t worth anything to anyone.
Lessen their anxiety during what may be an already stressful time by making an inventory of your financial life. It’s one of the most considerate things you can do for those you love.
Create a “Who’s,” “What’s” and “Where’s” document.
WHO?
Who’s on your financial team and how can family members contact them?
Accountant
Insurance agent
Attorney or law office that prepared your will or trust
Financial advisor managing your investments and finances
Human resources contact at work if you are still working
Banker or bank you use
WHAT?
What investment accounts you own
Life insurance policies
Long-term care insurance policies
Savings bonds
Collectibles, coins, physical gold or silver
A will or trust or both
Any online only accounts
Credit cards, loans, mortgages or other loans
WHERE?
Where are your “What’s” located?
Bank
Online
Financial advisor/estate planning attorney/accountant’s office
Home location
The most important “Where” is to first tell your children where they can find your organized document. They don’t need to know what is on your list if you want to keep that private for now. They just need to know where it is and how to access it when necessary.
Tip: Keep your list in a safe and secure location or with a trusted advisor so that your information is not easily stolen or compromised.
You clearly want what’s best for your family. After all, you’ve thoughtfully prepared for retirement.
If you’re uncertain if it’s enough or you have concerns about how to best manage it, however, we can help. We can counsel you on how to discuss your plan with your children too. Contact us today to arrange to meet.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
