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Retirement Planning with Children

October 24, 2016

Known as “The Sandwich Generation,” one in seven middle aged adults provide financial support to their grown children as well as to their parents. Burdened by the rising cost of college as well as the high cost of long term care for seniors, many families are feeling the stress of money management, especially retirement planning. 59% of parents say they would rather dip into their own retirement savings rather than have their children take on student loans. This is a prescription for a lower standard of living in retirement.

 

On the other hand, many recent college graduates feel overwhelmed by college debt. 73% of parents provide some type of financial support for their adult children, many of whom are living at home and/or relying on their parents for help with insurance coverage, utilities, or paying off debt. For both age groups, saving adequately for retirement may at times seem like a pipe dream.

 

Meanwhile, 83% of affluent parents do not discuss money matters with their children. Many children grow up with little idea of their parent’s wealth or how they manage their money, which in turn may make them financially illiterate adults. Learning how to manage money is an important skill, one they can start learning young. Starting with small but regular allowances, children can discover the power of saving versus spending as they watch their money grow.

 

It may feel difficult to save for retirement when there are too many bills calling for your attention. Parents may feel uncomfortable discussing finances, but doing so educates children about finances and helps them understand the best way to manage their money, which in turn may ease the pressure on the parent to help the child out financially as he/she becomes an adult.

 

A financial advisor can help you have these conversations. If children are unaware of how your money is earned and managed, they may appreciate your support less and have less know-how in managing their own wealth. They may spend instead of save. Retirement planning, critical for middle-aged adults, is essential to the younger generations, as they will likely receive fewer government entitlement benefits yet live longer and incur greater long term health care costs.


If you are wondering how to have one of these financial planning talks with your children or need help planning for retirement, TABER Asset Management can help. You can email us at invest@taberasset.com or call us at 515-557-1860. We would be more than happy to help.

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