Retirement in the United States has reached an all-time high. About 50% of those aged 55 and older retired last year for various reasons.
One prevalent reason is the pandemic. It has forced many people to rethink their retirement plans and realize they don’t want to wait any longer to enjoy their golden years.
Another reason for the high retirement rate is the current state of the economy. With inflation on the rise and the stock market volatile, retirees are choosing to take their money out while they still can.
However, retirement isn’t just a one-person process. The entire family must be on board with the decision, especially the children. Here are five ways to prepare for your parents’ retirement.
Talk to Them About Their Plans
Planning together is a crucial step in preparing for your parents’ retirement. First, you need to know their financial situation, their goals, and how they plan to achieve them. This will help you understand their needs and determine the best way to support them.
You should start listing down what they want to do with their lives. You should also start asking about their health and their plans for long-term care. It will give you a better idea of the kind of support they will need from you in the future.
Start Saving Now
If you haven’t started saving for their retirement, now is the time to do it. It’s estimated that 36% of Americans aren’t prepared for retirement, and your parents might be a part of that. Follow these principles if you want to start saving now:
50/30/20 rule
Following this rule is one of the best ways to secure your family’s future and help your parents retire. The rule states that 50% of your income should go to essentials like housing and food, 30% should go to wants, and 20% should go toward savings and debt repayment.
Save the Extra Money
Don’t spend it all if you get a raise at work or receive a bonus. Instead, put at least half of that money into savings to have a cushion for unexpected expenses. This will help you reach your goal faster and ease the burden on your parents.
Create a Budget
You need to know where your money is going if you want to save effectively. Track your expenses for a month so you can see where you can cut back. Once you have a good idea of your spending patterns, you can create a budget that allocates money for savings.
Emergency Fund
An emergency fund should cover at least three to six months of living expenses. This will help you cover unexpected costs in case something happens to your parents or they can’t work anymore.
Think About Their Future Care
Your parents are getting older and might need help with their care in the future. You need to start thinking about how you will provide for their needs. Do you have the time and resources to take care of them? If not, you need to start looking into long-term care options. One of the best options is in-home hospice care. This covers many costs associated with long-term care, such as transportation, nursing care, and medical equipment. It’s a good option because it allows your parents to age. They can stay in their own home and receive the care they need. This type of care is also covered by Medicare, which means you won’t have to worry about the cost.
Insurance
You also need to think about insurance. Health insurance is necessary to prepare for your parents’ retirement. They will need coverage for doctor’s visits, prescription drugs, and hospital stays. You should also look into long-term care insurance. It will help you cover the costs of their care if they can’t live on their own anymore.
The best time to buy long-term care insurance is when you’re young and healthy. Then, the premiums are lower, and you’ll likely be approved for coverage. The average cost of a long-term care policy is $2,700 per year.
You can also get life insurance for your parents. It will help you cover their funeral costs and any debts they might leave behind.
Prepare Yourself Emotionally
It’s not just the financial aspects you need to prepare for. You also need to be ready emotionally. This is a significant change, and it might be hard to adjust at first.
There are various ways you can prepare yourself emotionally:
-
First, talk to your parents about their retirement
It will help you understand their plans and allow you to talk about your concerns.
-
Join a support group
There are many groups available for people in your situation. This can provide a space for you to share your experiences and emotions.
-
Seek counseling.
Counseling can help you work through your emotions if you’re struggling to cope.
Your emotional state should be stable the moment your parents retire. This way, you can focus on providing for their needs.
Prepare for your parents’ retirement now, and you’ll be able to enjoy their golden years with them. Use these tips to get started and help them get the retirement they deserve.
