It’s kind of strange when the child suddenly becomes the voice of reason for a parent. It’s not necessarily that it’s a bad thing, but as we grow older, it sometimes seems to happen more and more.
I’ve begun to realize this as I’ve been helping my mother and in-laws begin to plan for retirement. And when it comes to retirement, I’ve seen that our parents aren’t always the ones who have the upper hand when it comes to financial knowledge. Even though they are our parents, sometimes it’s the kids who become the voice of reason when it comes to financial planning and retirement.
A huge part of retirement and retirement costs can come in the way of living location. And if that desired location involves relocating, there can be a vast array of factors and costs to be considered. From climate, geography and demographics, to property taxes, area amenities, available housing, housing styles, actual moving expenses, the costs of selling one home and possibly buying another, and much, much more, there can be a litany of issues involved in finding and settling into the right retirement location.
When a parent starts to talk about moving here and there, sometimes it helps to have someone there to point out some of the various issues — and costs — involved in making such a transition. It can help to have someone there to note that things like doctors, insurance agents, and the other familiarities of a long-term living location won’t be making the transition along with the parent(s).
Retirement fund allocation
Some parents don’t really pay much attention to their retirement fund performance or allocation. In some ways, this could be a good thing as they won’t constantly be fiddling with their asset allocations and doing more harm than good or worrying unnecessarily about fund performance. However, as parents near retirement, it may be the time to take a more active role in gauging what their retirement fund is doing and how it is allocated.
For example, one of my parents was weighted toward more risk in their portfolio as they neared retirement. I advised this parent to start paring down that risk, moving their fund allocation toward more secure funds with more stable performances a bit at a time as their target retirement date drew closer. In this way, this parent began to minimize asset risk when this money would soon need to drawn upon in retirement.
Getting a grasp on budgeting and income allocation
As I’ve worked with parents on retirement planning, I’ve noticed that sometimes the focus is more on the act of retirement rather than on how that transition will occur or what it takes to maintain a lifestyle after a steady work income has evaporated.
In an effort to get them on the right page when it comes to what their retirement finances will actually look like, I attempt to get these pre-retirees not only to figure out what incomes they will be receiving in retirement (Social Security, retirement account draw down, interest on savings, pensions), but also what their expenses will be. In this way, they can actually see their income compared to expenses, which can be a real eye-opener when it comes to the reality of retirement versus what they hope or think it will be.
More From This Contributor:
Building a Revenue Producing Blog
How I Differentiate My Blog
Preparing to Publish My First E-book
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.