Prepare Your Kids for FINANCIAL INDEPENDENCE
compare that 6K to your current income, it might not look like much, but consider what that amount could do if you invested it into your retirement. Diane Harris, a personal finance journalist, explains, “If, instead, you saved that much cash every year in a tax- deferred account averaging 6 percent annual gains, you’d have close to $100,000 more for retirement within a decade.” Make a Plan Once you consider what you’re contributing to your child’s lifestyle, you need to find out how it’s going to affect your ability to retire. It’s time to have the tough conversations. Before you talk to your kids, meet with your financial advisor and discuss your retirement goals. Your advisor can give you a reality check if your goals are not in line with your current lifestyle and tell you what needs to change to get them there. The Talk After your meeting with your advisor, it’s time to talk with your children. Explain how
your retirement plan is going to affect them. It’s best to be honest and transparent. Let them know that this isn’t about your feelings for them and give them time to process the information. Remember that even if your retirement has been top of mind for you, it may not be on their radar. Erin Lowry, author of “Broke Millennial,” reminds us, “Adult children can’t be expected to know how ongoing support is affecting your finances if you haven’t talked to them about it.” If you can help them understand how the change will impact them and maybe even help them plan for it, you can open up that conversation and reduce tension around it. Instead of looking at the end of financial support as a loss, frame it as an opportunity. It’s an opportunity for your child to find financial independence, and while the journey can be rough, it will benefit everyone in the long term.
Y our children turned to you for support all their lives. As babies, you provided them with food and shelter, and throughout their childhood, you guided them and led by example. But if you’ve continued to provide them with financial support into their adulthood, the lifestyle shift that comes with your retirement might come as a surprise to both of you. If your children are still dependent on you for financial support, it’s important to have a conversation about what might change with your retirement. It’s time to consider how your well-intentioned support will affect your retirement plans. Consider the Costs A study by Merrill Lynch and Age Wave found that, on average, parents over 50 gave their children a total of $6,500 a year. When you
AWill or a Trust What Document Best Fits Your Needs?
For many people, both a will and a trust can be useful. A will serves to ensure that property and assets are passed to a beneficiary according to the owner’s wishes. The will is drafted to meet state laws. Trusts are valuable in mitigated estate taxes and related legal challenges. They generally specify how and when property is distributed, again according to the individual’s express wishes.
and the terms of title deeds. A will provides legal clarity.
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Expedite the legal process. It is faster and
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Appoint and outline powers of an executor. Writing a will allows you to decide who will oversee and manage distribution of your estate. Designating a trustworthy and impartial executor provides peace of mind that both the terms of your will and your wishes will be honored. Appoint a guardian for minor children. Your will serves as a legal guiding document for the care of minor children in the event of the death of both parents. Specify funeral wishes. When you establish your funeral wishes in your will, this reduces stress on loved ones and ensures your wishes will be honored.
less costly to settle an
estate with a valid will in place. It helps reduce unnecessary legal fees which, in turn, help protect the value of property and assets passed to your beneficiaries. Reduce stress and heartache for loved ones. This point cannot be stressed enough. A will that clearly outlines your wishes for funeral arrangements and property distribution reduces confusion and family disagreements during a stressful and emotionally difficult time for family members. Next month, we’ll dive into the specifics of a trust and how it both contrasts and complements a will. •
This month, let’s focus on the will. A will helps to do the following:
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Ensure your possessions are distributed according to your wishes. If you die without a will, the law decides how your estate will be distributed. Although some property will automatically be passed to a spouse or child, exact distribution depends on the value of the property
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