Teaching Our Parents to Save for Retirement

Remember when you were in your late teens or early 20s and your parents sat you down to have a serious talk about your future? They probably did their best to convey the importance of choosing a good college, picking a major that might actually help you land a job, and finding a solid career to pay the bills.

Here’s the irony: When it comes to retirement, many young adults are finding that the tables are turned. These days, more and more millennials are having to teach their parents a thing or two about the importance of saving for retirement.

After all, anyone who’s entered the working world in the past number of years knows that saving for retirement needs to be a priority. With Social Security growing more and more precarious by the day, those in their 20s and 30s know better than to rely on it to fund their retirement years. But those in their 50s and 60s might still be thinking differently. In fact, according to a recent survey by Bankrate, 36 percent of Americans are failing to save for retirement. Furthermore, of those who participated in the survey, a good 25 percent of 50-to 64-year-olds have yet to contribute a penny toward retirement.

Some people approaching retirement assume that once they stop working, their costs will go down, and therefore they don’t need that much money to live on. Others might figure that their Social Security benefits will be enough for them to get by. But in reality, for some people, the cost of living actually goes up in retirement thanks to increasing medical expenses.

If you’re worried about your parents’ lack of retirement savings, it’s important to intervene before it’s too late. Here’s how:

  1. Sit them down for a talk. Explain that you’re concerned about their lack of retirement savings, and that you want to help them remedy the situation.
  2. Discuss the importance of taking action immediately. Those who manage to save well for retirement generally do so because time is on their side. If your parents are already getting close to retirement, emphasize the need to max out on their catch-up 401(k) or IRA contributions.
  3. Talk about healthcare costs. Some folks approaching retirement don’t realize just how much they’ll be facing in out-of-pocket expenses. According to Fidelity Investments, a 65-year-old couple retiring in 2014 will need approximately $220,000 for medical expenses throughout retirement, and that $220,000 doesn’t even cover long-term care costs like nursing homes or assisted living facilities.
  4. Figure out your parents’ goals. Your folks may be in for a hard reality check if they think they’ll be spending their retirement years traveling and engaging in leisure activities. That sort of lifestyle costs a lot of money, and the only way to get there is to start saving aggressively.

Talking to your parents about money and retirement can make for a fairly awkward conversation, but if you think your parents aren’t saving as they should be, it’s an extremely important one to have. The sooner you get involved, the more time your parents will have to alter their saving habits for the better.

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