Unfortunately even for financially astute parents life is not all plain sailing. As they advance in years their parental responsibilities may reduce. They should because children reaching adulthood have time on their side. Student loans are readily available and parents should think twice before they stretch their personal finances to help out because their own needs in retirement must be their priority. The recession hit many well thought out financial plans and it is sometimes difficult to make up for losses in limited time. There is increased nervousness among those in late middle age, about to retire or already retired that they might run out of money as life expectancy is increasing.
It is never easy to adapt to a lifestyle that is restrictive after years of being able to pay all your bills and enjoy yourself. Some will have little choice and may now be regretting that they did not do more for themselves before retiring. There are several regrets and if parents still have something to teach their now grown children it is not to make some of the typical mistakes they have made.
We haven’t done enough!
A recent survey by BMO Harris Financial suggests that 75% of retired people wish they had done more. It takes more than cutting back on dollar and cent spending each day to make a significant difference. What you really need to achieve is something like $10,000 extra saving which represents spending that much less each year.
- How many times do you eat out each month? You should include takeaway food delivered to your door and a coffee on the way to work. It is easy to spend $100 for dinner for two. If you dine out regularly then saving a couple of hundred dollars a month is entirely feasible. You’ve made 25% of what you need overnight. It is not really a sacrifice and using your kitchen more can be fun.
- You should take your time over buying your new auto and think hard about how frequently you really need to change it. If you decide on a specific model you should make sure you get the best possible price. There are members only discount clubs whose buying power is such that you should be able to save a few hundred dollars on your new auto and on many other purchases. The annual fee is insignificant compared to what you may save.
- Everyone has a smart phone these days. Your children should be perfectly capable of paying their own way and there are plenty of comparison websites that will guide you towards the best deals in the market place.
- It is easy to find an insurance provider and simply agree to the renewal when it comes in. You should compare like with like each time but once again comparative websites do much of the groundwork for you to regularly check whether you are getting best value.
Credit Cards
The money that these actions can save you should be put directly into your retirement plans whatever your age. However there are actions that you can take if you have allowed yourself to build up debt, especially credit card debt. The figures are disturbing. The average debt per credit card is over $5,000. However the average debt of those who are not settling their statement at the end of each month is over three times that. It is likely that you will be paying over 16% interest each month on your balance. That is sheer waste and if you are only paying the minimum the credit card company require each month you will hardly reduce that balance. If you pay off your balance with nation 21 fast loan you will have to factor your monthly installment into your budget but at the end of the term typically 3 years your debt will be gone and that will release more money for your retirement.
Join a Plan
It goes without saying that you should be taking advantage of any retirement plans that are being run by your employer. The 401(k) not only has tax advantages but employers will match your contribution up to a certain level and that is effectively ‘free money.’ As you get older you are allowed to add more ‘tax free’ and if you are not certain about the detail then ask.
You simply cannot afford to rely on the Social Security System which was never designed to be more than a support to retirement. Its future is under threat with estimates suggesting that benefits will reduce by 25% by 2030 without a significant injection of funds. You need to act if your provisions for retirement are poor and also give another piece of advice to the children; get started, even in a small way and their future will be much more secure.
