Many families today may face dual challenges. They have children who need money for medicine, clothing, recreation and education, and they have aging parents who need help with long-term care.
Are you stuck in the middle, struggling to keep up with your current living expenses and put aside something for retirement? The pull of competing financial needs can be hard to endure, but careful planning can help.
First, start with yourself. With life expectancies rising, you could spend 30 years or more in retirement, so don’t use your retirement savings for anything but your retirement. Employer-sponsored 401(k) plans, Individual Retirement Accounts (IRAs), and annuities allow your investment earnings to grow tax-deferred until withdrawn, which could mean greater asset growth than if you contributed to a taxable account.
Next, straighten out your children’s future. The first step toward financing your child’s education is to develop a college funding plan. To start, anticipate how much money you’ll need to pay for college, then consider how much of that you will have to pay (after financial aid, scholarships, grants and loans). Finally, subtract the amount you’ll need to pay from the estimated amount your child will obtain from other sources, then work with us to develop an investment plan to make up the difference.
Lastly, untangle your parents’ finances. Here, planning starts with finding out if your parents are prepared for long-term care expenses. If they aren’t, you may want to consider shifting some of your or your parents’ portfolio to investments with insurance components, such as annuities. Or look into long-term care insurance, which is best to buy while your parents are healthy enough to qualify and young enough that rates are affordable.
Call or email us today, and we can help you review your financial situation in light of your needs, your children’s needs and your parents’ needs.