Most people learn about retirement planning through their jobs, starting with their 401k and exploring further options from there.
But with a changing work world, your adult children may not have such an opportunity. How can you help them understand retirement planning?
Start by talking about what they want their retirement to look like
Retirees don’t all stop working due to age or health reasons. Many utilize retirement in order to enjoy other aspects of life, such as traveling or personal hobbies. Explain to your children that they should consider this so they feel better motivated to plan for the day they stop working.
Establish a target retirement age
Having a target retirement age is important, as it is part of the equation that will inform a retirement plan. Your child should shoot for an age where they’ll have enough savings, but are still young enough to enjoy life.
Establish a savings goal
There are many retirement savings calculators online that you can use to determine a savings goal, but it’s generally suggested that people shoot for one million in savings by the time they hit retirement age. Keep in mind that changes in the economy and inflation may alter this goal over time.
Break down that goal into months
Your adult child may have a while to reach their retirement savings goal, so they should start saving now. Determine how much money should be saved each month and if needed, refer your child to a financial planner that can help them.
Go over the options
Many young people are not so knowledgeable of retirement planning, and assume all they can do is put money into savings accounts. 401ks, IRAs and annuities should be covered in the discussion.
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