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Your Children and Your Retirement Planning

The future of retirement planning in the United States is at a kind of crossroads: traditional employer pension plans no longer offer the gold-plated guarantees they used to and it is more incumbent than ever before that individuals devise their own strategies for their long-term financial futures. However, this has come at just a time when retirement investors face an additional pressure: as parents they are increasingly obligated to offer monetary help to their children.

This picture is supported by a recent survey by Bankrate.com* in which half of American parents reported placing their adult children's financial needs above their own retirement plans.

More than a decade of slow wage growth coupled with a cocktail of spiralling living costs – for example, housing, health insurance and vehicle insurance – mean that younger generations are facing unique financial challenges. Add into this mix the cost and increased popularity of higher level degrees, and it is easy to see why parents might want to help out.

However, without early and clearly foresighted planning, acting as the "Bank of Mom and Dad" may ultimately prove a false economy by undermining the financial security of your retirement while also limiting your ability to effectively plan a financial legacy for your passing.

Plan Early to Enjoy Your Retirement

If you want to be in a position to help your children with their education fees, housing costs and other significant capital outlays, you need to factor this into your retirement planning strategy.

As a general rule, the sooner you begin saving, the greater the possibility of your enjoying significant wealth in the long-term, particularly once you factor in the benefits of compound gains (the interest you earn on your interest).

By taking prudent steps to account for the future financial needs of your offspring you can help support them as they move into adulthood, while also giving yourself the best possible chance of enjoying financial freedom in your retirement.

Seventeen percent of the couples who took part in the Bankrate.com survey said that the financial help they offered their children had resulted in significant sacrifice of their retirement plans; a further 34 percent said their help had come as "somewhat" of a sacrifice. However, by taking action now, you may be able to plan effectively so that you can get the balance right.

Plan your retirement with help from Blacktower in the US

Blacktower in the US can help you plan for your retirement in a way that accounts for all of your goals, including Bank of Mom and Dad assistance to your offspring and legacy plans for your passing.

For more information about how we may be able to help you – as well as any cross-border wealth management concerns you might have – contact us today.


*https://www.bankrate.com/personal-finance/financial-independence-survey-april-2019/ - Accessed 24-04-19

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