Top 100 Blogs
Guest bloggers
Hostinger

Related Posts

Encouraging Financial Responsibility as Your Parents Enter Retirement

HomeBusinessEncouraging Financial Responsibility as Your Parents Enter Retirement

It’s natural for people to worry about their parents as they get older and embark on retirement. But many adult children have to get directly involved in their parent’s retirement plans and help ensure they thrive in their later years.

A considerable part of that direct involvement is helping parents adjust their financial habits. Parents entering into retirement around 2023 are a part of the baby boomer generation — in which the economy was thriving, credit was available to nearly everyone, and wealth was for the taking. 

Today’s economic climate isn’t as generous. As a result, our parents are retiring at a more financially strict time, unlike what they grew up in. 

Adult children trying to aid their parent’s smooth transition into retirement must encourage financial responsibility more than anything.  

Have an Initial Conversation 

First, it is crucial to sit down with your parents well before they retire to solidify a financial plan for when they do. Get answers to the following questions to get a feel for how they want to live in retirement and determine how they can swing it financially: 

  • When do you want to retire?
  • Do you still want to work in retirement?
  • Do you plan on moving? If so, where?
  • Do you want to travel?
  • What will be your sources of income in retirement?
  • What will your expenses be?
  • Do you have any savings? Investments?
  • Do you have a plan for continuing to grow your finances?

Account for Healthcare Costs 

Your parents’ holistic health will change as they get older. And sometimes, not for the better. If something goes wrong health-wise, you want your parents to be able to get the care they need without issue. 

So, it’s essential to talk about and prepare for healthcare costs in retirement. Go over where they are currently with their health. Also, discuss their current health insurance and if it’s a good idea to upgrade to something more comprehensive and cost-effective.  

Consider sitting down with their doctors, as well, to see if they can give you more information on how their health will change with age and the potential costs associated with that. 

Create a Retirement Budget

Teaching your parents how to create and stick to a budget will ensure they live below their means while still being able to enjoy the things they want in retirement. 

Start with determining what their income will be. After that, write down their current expenses and specify if they will have any new expenses when they retire. Don’t forget to account for healthcare expenses. 

Once you’ve solidified their income and expenses, talk about what they want to do during retirement, like traveling or moving, and how much these things will cost. You can allocate a specific monthly amount to save for these activities. They may also want to save generally or invest. 

Finally, document all the details of their retirement budget. Show them how to access their budget information using an app, spreadsheet, or paper. And commit to being their accountability partner for at least a little while to help them stay on track.  

Pay Off Credit Card Debt

Lendingtree revealed that 81% of baby boomers are burdened with credit card debt, with the median balance being $3,958. Considering how high interest rates can be and how income fluctuates in retirement, paying off such a balance won’t come easy for your parents. 

Still, they must do everything possible to pay off credit card debt. If they don’t, those balances will linger and create more financial stress during a time they should be enjoying their lives to the fullest. 

Help them devise a plan for paying off their credit card debt as quickly as possible. 

For example, can they consolidate all credit card debt into a single loan with a low monthly payment? Or, if they want to pay off each card individually, how fast can they do this with their current income? What about getting a part-time job or starting a side hustle? 

The faster they can pay off their credit card debt, the better. 

No New Debt 

In addition to paying off their credit card debt, stay on your parents about not accruing new debt. Accruing new debt only prolongs their becoming debt-free and, ultimately, stress-free during retirement. 

New debt could also mean you or someone else in the family resumes responsibility for it at some point. This is because as they get older, death gets closer. And when your parents pass away without enough money in their estate to cover their existing debt, you and your siblings may be responsible for it. 

For example, when someone dies with a car loan, the debt initially belongs to their estate. But let’s say your parents don’t have enough money in their estate to cover the loan, and you’re a co-signer. In that case, you’d assume full responsibility for it. 

So, encourage your parents to stick with what they have now and not accrue any new debt. But if they want to take out a loan later in life, and need you to be a cosigner, really understand what you’re getting yourself into should they pass away. 

Beware of Scams

Unfortunately, scammers are happy to target older adults. They know that many are struggling with a decline in their cognitive function, affecting their ability to understand and make good decisions, especially financially. 

As you help your parents plan for retirement, be sure they’re aware of the financial scams that target seniors, like investment schemes, telemarketing fraud, and identity theft. Doing so will ensure they can spot these scams, take action against them, and protect their finances. 

Moving Forward

Ensuring your parents are financially responsible during their retirement is a significant task. But you can use the tips above to ensure it’s manageable for you and your parents.

You may want to read more,

pearls of wisdom
Indiana Lee
Indiana Lee
Indiana Lee is a writer, reader, and jigsaw puzzle enthusiast from the Pacific Northwest. An expert on business operations, leadership, marketing, and lifestyle,

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest Posts

Sharing is Caring!

Help spread the word. You\'re awesome for doing it!