Retirement Planning for Parents
Are you a parent looking into planning your retirement? Or maybe your parents are due to retire and you want to learn how to help? Our guide to retirement planning for parents has in-depth information for you
Get retirement adviceRetirement planning helps you to financially prepare for a time when you are no longer earning an income from employment.
But as a parent, you might want to plan your retirement in a much broader sense than considering your own needs. For instance, thinking about how you can financially provide for your children or grandchildren during retirement. Plus, you might want to take the opportunity to make your wishes known for any legacy planning.
Here at Holborn Assets, we offer retirement planning on a global scale. As well as helping parents plan for their retirement, we can also advise those wishing to navigate their own parents through the retirement planning process.
So whether you yourself are a parent, or if you’re wanting to help your own parents figure out their retirement options, here is an overview of what you need to know.
Retiring As A Parent – What Do I Need To Consider?
Let’s start with retirement planning for yourself as a parent.
First and foremost, retirement planning as a parent is about putting strategies in place to secure your future, when you’re no longer earning an income from your career and your financial situation is likely to change.
In short, your retirement plan will need to consider everything that will need to be paid for from the time at which you retire until the end of your life – essentially, you need to create a retirement income, which factors in your estimated monthly expenses and cost of living.
So on a fundamental level, this will cover your living expenses to maintain your current lifestyle as a high-net-worth individual (HNWI) or an ultra-high-net-worth individual (UHNWI). Beyond this, you will need to plan for increasing healthcare costs as you age, which are often significantly higher than most people realise.
As a parent, you may also want to include money for your children or grandchildren. Plus, cover wealth protection or legacy planning as part of your broader financial plan.
Retirement planning also happens to be one of the best ways to protect your children from the burden of worrying about your needs as you age. This makes having a retirement plan in place invaluable as a parent.
Types Of Retirement Planning For Parents
- Retirement Planning for Couples
- Retirement Planning for Expats
- Retirement Planning for Gen X
- Retirement Planning for High-Net-Worth Individuals
- Retirement Planning for Medical Professionals
- Retirement Planning for Millenials
- Retirement Planning for Single Parents
- Retirement Planning for Women
- Retirement Planning for Working Parents
Don’t see your retirement needs above? Our retirement experts may still be able to help you. Please contact us to discuss your parent retirement plan needs.
How Much Do I Need To Retire?
The amount you need to retire will vary from person to person, and in this case, parent to parent!
It will consider money that can be derived from any pensions, investments and savings.
Some of the top aspects to consider in relation to your desired lifestyle in retirement include:
- Healthcare costs
- Living expenses
- Property or home improvements
- Holidays
- Other lifestyle purchases
- Financial gifts to children or grandchildren
All of which needs to be considered realistically, including the potential for further inflation. From there, monetary figures can be generated based on how much you will need in your retirement fund to reach your goals.
A financial adviser who specialises in retirement planning can help you determine how much you’ll need to save for your retirement.
Read more: How Much Money Do You Need to Retire?
How To Help Your Parents Plan For Retirement As A HNWI or A UHNWI
Did you know?: đź’ˇ“3% of Baby Boomers only have between $0-$25,000 in retirement savings” – Due.com
Now you’ve thought about your own plans for retirement, your thoughts will naturally turn to your own parents, and how prepared they are for their future. Or not, as the case may be.
If you’ve been Googling phrases such as ‘my parents aren’t saving for retirement’ or ‘my parents don’t have a retirement plan’ – you’re in the right place.
There’s a natural shift in all parent-child relationships, whereby the child starts to become the parent, and feels like the one who needs to be responsible. The only problem is, even though you may mean well, your parents are likely to push back on any suggestions to plan for their future. This can be down to stubbornness or even embarrassment that they are not as financially prepared as they should be.
It’s important not to give up though, especially if your parents do not have an adequate plan in place for retirement – it can be difficult for some parents to take the advice of their adult children.
As a HNWI or a UHNWI wanting to help your parents during retirement, there may be various strategies that can be put in place to financially protect your parents.
That said, it’s essential to speak to a financial adviser and to do so at the earliest opportunity. A guided decision will factor in the limited amount of time you have before retirement age, and look at the suitable options.
Most importantly, we can help you work out how to help your parents financially and still save for your own retirement.
You may also be interested: How to Generate Passive Income for Retirement
How to Start the Retirement Conversation With Your Parents
“One-third of adults with at least one living parent are providing financial support to them. 40% of respondents expect to provide support to their parents in the future.” – CNBC
Helping your parents plan for their retirement starts with one thing: a conversation.
Obviously, it’s important to approach the discussion from an angle that is helpful and supportive, rather than coming across as frustrated or judgemental. If you’re not sure where to start, talking about your own retirement plan, including the weight it has taken off your mind could be a source of inspiration for your parents.
Also, you could discuss options for supplemental income for your parents. This could involve looking at new sources of income, or seeing how any existing assets could be used to fund their retirement.
If we can offer any nuggets of wisdom here, it’s that often, starting the conversation around retirement with your parents is the most challenging part of the process. Once the lines of communication have been opened, it’s going to be much easier to start putting tangible steps in place to secure your parent’s future.
In contrast, not having the conversation about retirement planning (however difficult it may be) runs the biggest risk of all.
What To Do If Your Parents Have No Money for Retirement
The first step would be to have a discussion with your parents as soon as possible about their options.
In short, the process will involve working out a retirement budget. Also, to look at minimising any debt, and see if there are any existing assets or opportunities available to them.
If you are a HNWI or a UHNWI worried about your parent’s retirement, working with a retirement expert at Holborn Assets can help you navigate the process. Specifically, looking at how to help your parents retire and save for your own future.
5 Mistakes To Avoid – Retirement Planning Tips For Parents
Getting retirement planning right as a parent is ultimately about gaining peace of mind. That is, that your own children won’t need to worry about your financial needs in retirement.
Likewise, as someone with ageing parents, you want to be sure that parents will be well taken care of in their later years.
While the type of retirement planning may be different as a parent or as someone with parents, many common themes overlap in terms of the following mistakes to avoid.
Not Starting Early Enough
It’s a simple fact that the earlier you start planning for your retirement, the more options you have. For instance, you can explore different investment types, and even varying risk levels with more time to manage your portfolio before you need to access it.
But beyond the financial incentives of early retirement planning, securing your own financial future can lessen the worry and burden for any future generations.
For anyone looking to plan for their parent’s retirement, time is also of the essence, since some time to plan is better than no time at all.
Underestimating Healthcare Costs
A study by Fidelity found that the average 65-year-old couple will need $295,000 for medical expenses in retirement – this excludes long-term care costs.
The truth is that none of us know what our healthcare costs might be as we age, or even how long we may live for.
Therefore, a huge mistake is to not have a retirement fund which has flexibility for additional care needs.
Paying Too Much Tax Due To Inefficient Strategies
Few people are retirement experts, let alone tax experts. Add in the complexities of being a higher earner or even an expat, and there’s even more risk that you could be paying too much tax.
Overpaying tax ultimately means less money in your retirement fund, and even inheritance funds for your children or grandchildren.
Any retirement planning should therefore include efficient tax strategies to ensure your overall wealth isn’t being reduced unnecessarily.
Read more: Guide To Tax And Pensions
Not Regularly Reviewing Your Retirement Plan With An Expert
Circumstances often change and so does the economy. So it’s also a mistake to initially create a retirement plan and never think about it again.
Without regularly reviewing your retirement plan, your future goals may no longer be on track. A retirement expert can ensure all opportunities are being taken, and that your goals remain realistic.
After all, there’s little that can be done to reverse a lack of attention on your retirement plan when the time comes to access your retirement fund. However, if a close eye has been kept on your retirement plan, nasty surprises are far less likely to happen.
Failing To Make The Conversation Around Retirement Multi-Generational
Putting steps in place to plan for your retirement is incredibly wise, especially if you’ve started the process early in your career.
But what’s also important is that the conversation continues to consider your own children and grandchildren where applicable.
As we’ve found above, it can be very difficult to talk to our own ageing parents about their retirement.
Therefore, a gift you can provide to your own children or dependents is to take care of your future needs through retirement planning now, to avoid this same scenario being repeated in the future.
Also, to inform your children as part of the process, so that they too put a retirement plan in place early.
Parent Retirement Planning FAQs
Want to learn more about how you can plan for your retirement as a parent, or help your parents plan for their own retirement?
We’ve answered some of the most common queries below.
As a single parent, you will typically require more money for retirement due to the lack of shared assets.
When you work with one of our retirement experts, we’ll ensure your plan is adjusted to your specific needs as a parent. So whether you are a newly single parent, or have been a single parent for some time, we can ensure your retirement goals are on track.
The transition between working life and being retired as parents can be challenging to navigate. However, seeing how this could be feasible is the exact purpose of having a retirement plan in place.
Your retirement planning expert will consider all assets and strategies within your portfolio. From there, a plan on how your retirement will be funded can be mapped out.
Read more: Retirement Planning for an Early Retirement
As a HNWI or UHNWI, there are lots of ways you can help your parents during their retirement.
It’s key to identify any concerns you currently have about your parents retirement, since this will allow your retirement planner to suggest the most suitable solutions.
Many people want to make sure their parents will have a suitable place to live as they age, plus have access to adequate healthcare or support. Once these fundamentals are taken care of, there may be other financial measures you wish to put in place, so that your parents have a comfortable retirement.
No two parents are the same, so it can be challenging to know how to raise the subject of retirement with them. Talking about potential future care needs (and how this will be funded) can be even more difficult.
If you’re currently doing your own retirement planning with us here at Holborn Assets, talking about this with your parents can be a great icebreaker. Maybe you want to share some of your pre-existing concerns, and how sitting down and talking about your future has been of benefit, both in terms of a financial and wellbeing sense.
Purchasing a retirement property specifically can have a lot of complexities. Alongside mortgage lender difficulties, if the person requires more advanced care as they age, then the purchaser of the home can be left with additional costs. Also, retirement properties tend to have limited value appreciations, due to the restrictions on who can purchase them.
It’s essential to research what’s right for your portfolio. Though, another option which may be more suitable is to purchase a home for your parents which is not a designated retirement property. That would mean this property can easily be sold down the track, without the types of implications that retirement properties often have.
Depending on whether you approach this topic from a legal or moral perspective, the answer may differ. In some jurisdictions, children are legally obliged to financially support their elderly parents, if their parents are unable to do so themselves.
However, in most cases, it’s more a case that children feel like they should provide for their parents as they age, particularly if they do not have a sufficient retirement plan or fund in place.
Ultimately, there are no clear answers. But by talking to a retirement expert, we can help you work out what may be possible to at least remove the worry from your mind.
Holborn Assets – Start Your Retirement Planning As A Parent Today
Are you wanting to plan for your own retirement as a parent, or guide your parents through the process? There isn’t a better time to start your retirement plan than today.
Holborn Assets specialises in retirement planning, with an excellent reputation for quality assurance. With a global presence in 18 locations we also offer retirement planning for expats.
For any help or advice with anything we’ve mentioned above, send us a message and our team will be in touch shortly.
You can also keep up to date with our latest retirement planning news and advice over on our Instagram, YouTube or LinkedIn channels.
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