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How Your Parents Plan To Support Themselves in Retirement
It can be uncomfortable to discuss financial plans with your parents, but not having these conversations now can make things more difficult for you and your siblings down the line if it turns out that your parents don’t have a retirement plan in place.
“We should definitely talk more with our aging parents about their financial situations and how to plan for them — not just with the parents, but also other siblings,” said Yaron Ben-Zvi, CEO of Haven Life, a life and disability insurance agency. “This isn’t always easy, but can avoid a lot of stress down the road if aging parents don’t actually have the resources they need to live comfortably in their golden years.”
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Your Own Retirement Plans
In addition to being aware of your parents’ plans for retirement, you may also want to check in with your peers to make sure that you yourself are on track — even if retirement currently seems far away.
“‘Saving for retirement’ is a nebulous phrase that many people do not understand fully, and therefore, they put it off longer than necessary,” said Leslie Tayne, founder and head attorney at the debt solutions law firm Tayne Law Group. “By speaking openly about how much one has saved for retirement and their saving practices, it becomes easier for those younger or newer to saving to understand the scope of long-term financial stability and goals.”
Talking about money — especially in the context of death — can make anyone uneasy, but you should be discussing estate plans with both your partner and your parents.
“Talking about death or severe illness/disability with your partner is probably not your idea of romantic pillow talk, but estate planning is, in some ways, a final act or expression of love,” said Tara Falcone, CFA, CFP, founder of ReisUP and ambassador for Trust & Will. “Your medical or end-of-life wishes are the last thing you want your loved ones to be stressed out about if something happens to you. For example, when my father passed away at 36 years old, he didn’t have a will, nor had we discussed his wishes even though we knew his illness would likely take him. Not having those documents in place fueled a lot of heated discussions and sleepless nights that could have been avoided.”
Check Out: 30 Greatest Threats to Your Retirement
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Living With Debt
Having debt from student loans, credit cards, car loans, etc. is very commonplace, but it’s a topic that many people shy away from discussing.
“I’ve found that many people try to downplay their debt because it makes them have to face the reality of potentially living beyond their means,” said Jazmin Williams, an advisor at Equitable Advisors. “Though this can be an uncomfortable topic, it is so important to discuss because, oftentimes, there are people that have gone through similar situations that could potentially share some advice.”
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Although you may not want to discuss your salary with your friends, it is a good idea to discuss how much you make with your peers, other people in your industry and your employer.
“Discussing salary helps address information asymmetry because knowing what others make in similar roles can help you understand if you are being compensated fairly,” said Jacob Rademacher, CFP, financial planner at eMoney Advisor. “Talking to your employer to see if there are professional certifications or designations or continuing education opportunities to elevate your salary is also helpful. The more information you have, the more confident you will be negotiating your salary with your current or new employer.”
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Budgeting and Spending
Because we tend to keep the basics of our financial lives very hush-hush, it can be difficult to gauge how your financial situation compares to others.
“With pressures like social media, it can be easy to feel like you are not on pace with your peers when it comes to finances,” Rademacher said. “Without open discussions, we make assumptions and jump to conclusions about how successful other people are or are not. Talking about money with friends can clear up the uncertainty and help you set realistic expectations with your own budgeting and spending plan.”
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Your Financial Goals and Attitudes
Money can be a taboo topic amongst couples, but it’s important to make sure that you and your partner are aligned when it comes to your finances.
“Meet with your significant other regularly to discuss your financial goals and strategies to reach them,” said Ivan Watanabe, managing partner at Opus Private Client.
You should also openly discuss your attitudes and beliefs about money.
“Questions such as ‘What would you want to do if we won the lottery tomorrow?’ and ‘What could you absolutely not live without if we had to make do on less money?’ carry a lot less emotional weight if they aren’t accompanied by an actual change in circumstances,” said Sarah Tims, partner and senior wealth advisor at RMB Capital in Chicago. “By tackling these topics head-on in advance instead of avoiding them, they can help you have those values discussions constructively and prepare you for the tactical decisions that you’ll need to make if and when those events occur.”
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