- May 2, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Supporting Parents’ Retirement Planning
Hello all,
I want to preface by saying I have been following this sub and have learned many tips for my own finances. I am also extremely lucky that my husband has access to a great financial advisor through family and we are well above target for our own retirements.
This question is about taking care of my parents who are in their mid 50s that I expect will be retiring in the next 10-15 years. Their mortgage will be fully paid in less than 4 years, they have no other debts. They make about 80,000 combined before taxes. My mother has a 401k which she puts about $3000 a year(with match) in for the last 20 years and my father has always worked for his family business which has no benefits. As far as I am aware he has about $5000 in cash hidden in the house, otherwise they have no savings.
I am the only child who will be able to support them when they retire. If I have a surplus of $10,000-15,000 I can invest yearly for them starting today, what is the best way to do that? Bonus points if they don’t have to know.
Thank you for all your advice.
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If there’s still 10-15 years left until they retire your mom has time to increase her retirement contributions. You don’t say what her 401k balance is right now but I’d imagine it’s not the worst for someone with 10-15 years until retirement. If they’re not big travelers or spenders I’d think her 401k plus social security could last them quite a while in retirement
> If I have a surplus of $10,000-15,000 I can invest yearly for them starting today, what is the best way to do that?
The most tax efficient way would be to invest it in tax advantaged accounts such as their Roth or Traditional IRAs. Alternatively – just open a brokerage account (Fidelity, Vanguard, …) and put Money there, investing in Index funds or Target date funds. When Time comes – that’s the account where you withdraw money to help your parents.
First thing I’d do is make sure they know their retirement is their responsibility. You can be there to help, you’ll make sure they aren’t homeless, but you won’t be bankrolling any sort of lavish retirement. Encourage them to work until max social security.
I would probably keep the surplus all in my name, maxing out 401k/IRA. The only asset you might be able to protect is their house. You can look into putting that into a trust. Otherwise I’d keep the money in my name and in 10-15 years give it out as needed. I guess you could buy long term care insurance for them or even put money directly into an IRA for them, I just wouldn’t go that route personally.
You expect they will be retiring? You don’t want them to know what you’re doing? Why all the indirect communication? As far as you know? This post would be a field day for a therapist. And given the indirect communication, I would not trust what they are reporting necessarily.
Why not have a transparent sit down with this financial advisor and your parents?
If you have an extra 10-15k the best way if you don’t mind then getting control of it would be have them increase their 401k to match that 10k+taxsavings and gift them the 10k.
How about talking with your parents about their retirement readiness and to plan ahead for how and when they wish to retire? Since both work they will eventually have (if you are in the US) SS plus other pension funds and 401K plus whatever other monies they have and a paid off home. Ask them about long term care needs as well. This can plant seeds for them and they can begin to discuss it as a family.
Not going to be an ass here but why is this your responsibility?