Getting ready for retirement can be tough. Getting parents ready for retirement can be even harder.
I’ve had the honor of working with several parents lately on retirement planning. And there are several conversations and topics that tend to stand out in my mind as the most important that we’ve touched upon.
The following are some of the aspects that I’ve tried to focus upon with them on in an effort to insure they are best prepared for their golden years.
Expense and assets tracking
Frankly, I’m often amazed when people don’t know what they have in assets or what they spend regularly, although I suppose I shouldn’t be. To me it all just seems so normal, but to many, I’m afraid that knowing such information off the top of their head would seem rather abnormal. However, as I’ve worked to prepare several parents for retirement, it’s a conversation I tend to start with, especially when it comes to expenses. Knowing how much you spend can help you figure out not only where to cut costs if or when necessary, but also how determine just how much in income is needed to maintain those expense levels.
I’ve sat down with parents nearing retirement and outlined just about every expense I could think of. From holiday and birthday gift spending and vacation costs, to utilities, food costs, and home-related expenses, there are a variety of costs to consider moving ahead into retirement. Being able to compare these expense totals to an outline of assets and income sources such as pensions, retirement plans, savings, and Social Security can be a great first step in helping to gauge just where pre-retirees are in their financial situation and preparedness.
Retirement homes and location
Where a parent — or just about any retiree for that matter — ends up living in retirement can play a huge part in just how much they spend during their golden years. Discussing where the right living location for a parent is in retirement may be one of the most important retirement conversations I’ve had. In these conversations, here are just some of the topics we’ve touched upon:
- Living location (region/state/urban vs. rural)
- Type of home (rental/single-family/condo)
- Style of home (large/small/split-level/ranch)
- Cost of home
- Property tax rate
- Mortgage vs. no mortgage
- Proximity to family
- Proximity to amenities
- Lawn/yard care and maintenance requirements
- Moving costs
- Things to do in a potential location
- Possible income sources and tax rates in various locations
Touching on these topics early on can help both children and parents get a better feel for where a parent will be living in retirement, how they will live, and how much it could cost them to live there.
My wife has three brothers, and while I don’t expect there to be much if anything left of the in-laws’ estate upon their passing, when I found out a while back that they didn’t have a estate plan, I realized that I really didn’t want to be intertwined with the siblings trying to help my wife deal with all the various parties involved. Therefore, my wife and I pushed her parents to put some clarity to their wishes as to how they wanted their estate to be handled upon their passing.
When preparing for retirement and discussing various financial issues, I found that it can also be a good time to discuss with parents their wills, account information and locations, and other relevant information pertaining to estate and funeral planning. It’s often important to bear in mind during this planning process that having such a plan may not do much good if you don’t know where such information is stored. A simple safe deposit box at an area bank can play a critical element as the prime location for retaining such information securely and in a spot that’s easily remembered and located.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.