Planning for retirement is an often ignored phenomenon among the younger working class. However, once kids and more responsibility kick in, one tends to get more serious about planning for retirement. Planning future financials is not merely limited to a single IRA account or a 401K. While these are essential components of retirement planning, with kids in the picture there is much more to think about.
Planning for Retirement – A Different Approach
Kickstart your Kid’s Future
Parents new and old wonder where the time goes with their kids! Soon enough they will be off to college, potentially facing lots of student loan debt. Defaulted student loans are major financial burdens for children. Therefore, as a parent, I am looking to ease that burden for them with a little bit of help to kick start their education. That said, planning for your child’s education becomes a crucial part of your retirement planning. Your kids can take out loans for school; you cannot take out loans for retirement. Make sure your ducks are in a row before committing to regularly saving for your children’s education.
Some of your options to do this include 529 plans and high yield savings accounts. The point is to ensure you budget some money on a regular basis to contribute to these funds. Once created, you can invest in these funds passively or aggressively depending on the risk you are willing to take. Additionally, you can choose to invest money into the stock market for a greater potential return. Like a savings account or CD, this money isn’t contingent on them attending college if they choose a different route after high school.
Get Your Portfolio Sorted
With kids in the picture and childcare costs kicking in, financials need to be looked at more rigorously. A 401K is an easy place to begin planning for retirement. Pick the right balance between stocks and bonds. Remember that these are fluid investments. You can easily shift things to change your risk or add diversity.
IRA’s are the next best place to look. You can research and find out the high yield IRA options. Weigh the pros and cons of traditional vs Roth IRA based on your tax brackets before you invest.
If the stock market is a significant part of your financial portfolio, make sure you are carefully watching the trends and movements of your investments. Making the buying and selling decisions at the right time yields the best results with these kinds of investments.
Have You & Your Family Protected
Having the right amount of insurance to protect your family should also be a key consideration when planning for retirement. Unexpected events can happen to anyone at any given time. Therefore, keeping a will and comprehensive insurance coverage is a crucial part of the plan. Consider life insurance for both parents (whether working or not), long-term disability coverage and health care directives as well.
Planning for Retirement – What Not to Ignore
Apart from all the high level investing and saving options mentioned above, there are some everyday things you need to do to ease any future financial burden.
Teach Kids About Money from a Young Age
Take steps to teach your kids about money from their younger years. Teaching them the value of money, saving, and investment can be a good foundation for better money management in the future. American Consumer Credit Counseling has some great material to suit each age group on money lessons.
Manage Credit Card Debt
Debt limits the success of your financial future if not managed right from the start. Work towards reducing credit card debt to ensure you are not tied to any major financial liability. Debt relief is a major component of a secure financial future for you and your family.
Keep Your Credit in Good Standing
The strength of your financials depends on how well you manage your credit. Making timely payments on your credit cards and having the right mix of credit in your financial portfolio are some of the many things you can do to improve your credit. Here are some more tips from ACCC on how to strengthen your credit.
If you are looking to speak with a certified credit counselor about managing your financials, call 800-769-3571 today!