There’s one thing that all parents will agree on, regardless of religion, political affiliation, or generational status. Kids are really expensive. Medical bills. Clothes. Cell phone. College. Over the years, it all adds up. But eventually, the kids leave home to start their lives in the adult world. Suddenly, empty-nest parents have a decision to make. What should you do with all the extra money?
Sure, the temptation is there to take a lavish European vacation, or buy the new car. But according to The Center for Retirement Research, roughly half of American workers may not have enough money saved to maintain their standard of living upon retirement. One option is to put aside more money into your 401k. That’s not a bad idea, yet the Center tells us that for most people, 401k savings only increases modestly, anywhere from an additional 0..3%-1%.
The other aspect to keep in mind is that if parents continue to spend at the same levels they did when their kids lived at home, they’ll actually see their standard of living go up. The bad news is that sets the bar higher for the amount of money needed to maintain that standard of living after they retire.
Luckily, it’s not a binary choice that you’re forced to make. Smart retirement planning is possible at any stage of life, but the trick is to come up with a workable plan and implement it sooner rather than later. To make that happen, or for any other questions, contact us for a free consultation.