Published by Taylor Financial Group
Many of us are struggling with balancing our competing roles as parents and planning for retirement. We all want to give our children the best education, great vacations, and a nice place to live. But those things cost plenty of money and you may be wondering how you will ever be able to afford a comfortable retirement. According to the Department of Agriculture, it now costs $233,610 to raise a child from birth to age 18 and that’s before any extra items like college costs. While these high costs could add a lot of stress to any parent, here are five tips to help you save for retirement and give your kids a good upbringing:
Consider waiting to have children. Typically, if you have children at a younger age, the bigger the hit is to your budget as most younger parents may not have enough savings to pay child-related costs, such as daycare.
Watch your costs during the first year that your child is born. Don’t go overboard on spending your hard-earned money on the latest stroller or that high-end crib. Ask friends or family for slightly used baby furniture.
Take advantage of saving opportunities. For example, when your adult child becomes financially independent and no longer requires your help, try to increase your 401(k) contributions or max out your IRA for that year.
Make saving for retirement a priority in your financial plan. Many parents are conflicted between saving in a child’s 529 college savings plan versus funding an income for retirement. Sure, the costs of a college education keep on rising, but you need to remember that there are no loans or scholarships available to you for retirement, while there are plenty of opportunities for your children to receive funding for their higher-education.
Limit the amount of money you give to your adult children. There’s nothing wrong with giving your child the occasional financial gift, but it’s also important to teach them to stand on their own two feet. In 2015, the Pew Research Center conducted a survey and found that 61% of U.S. parents helped their adult children financially in the past year. Set rules for your adult children about what their financial responsibility is in your home. For example, if your child moves back into your home after college, have your son or daughter pay a portion of your food bill.
Do you need some help setting a family budget and making saving for retirement a financial priority? Contact us today!
Source: Journal of Accountancy, Balancing Costs of Parenthood & Raising Children, January 2018.
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