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You vs the Kids – The Battle for a Better Retirement

As a parent your life is largely spent providing support for you children. Whether it’s buying their food, saving for their education or keeping a roof over their heads, it can feel that the support you offer is all too often a financial one. You poured every asset you own into their future, and then, one day, your children leave home.

Planning for the future with kids still at homeRetirement is calling but you may have little in the way of savings, or like most Americans, are without a “pension-only” retirement plan.

For many parents today, this reality forces a choice. Do you financially support your children until they are self sufficient, only for it to be too late to protect yourself in old age? Or do you look after yourselves, storing up a retirement fund and leaving your children to finance their own future through the accumulation of debt?

Surely there is a balance between caring for your children and preparing for your retirement?

The problem is that children are expensive. According to the U.S. Department of Agriculture’s annual report, the average cost of raising a child for a middle income family is  $300,000 over 17 years, this is before college and any other expenditure after their 18th birthday.

With these kinds of numbers stacking up against parents nationwide, the idea of saving a substantial amount for retirement becomes increasingly difficult. To make things worse, many forms of retirement income are looking remarkably feeble, and it seems that only vast amounts of savings can provide the retirement future you may have envisaged for yourself and your partner.

However, there are some techniques that can help you prepare for your old age, whilst still providing your family with the support that you want to give them. It doesn’t require an indepth understanding of the financial world, nor does it require you to rent your home and live in the yard—just good old fashioned family budgeting.

Prioritize Debt Repayment

Saving for retirement is something that should be considered as soon as possible because simple as it sounds, the longer you save, the more you’ll save.  With all the credit cards, loans, mortgage payments or rent, however, it may feel impossible to set anything aside each month.

For this reason you need to think about how you can prioritize your repayments. Look at your existing debts and focusing on the biggest ones first, this is because they will be accumulating the most through interest.

Every piece of debt you owe today, reduces the amount you can pay into your future. If you can reduce outgoings elsewhere, even if this is done over the course of a few years, you will eventually be able to put larger amounts into your retirement fund.

Prioritize Life

Decisions made in the home will affect the entire family. If your kids have yet to leave home it’s important to distinguish between intelligent, calculated decisions and things that may seem (in the eyes of your children) unfair. For example, if those weekend trips to the mall are becoming a drain on your expenses then ask yourself, wouldn’t that money be better suited to providing them with an education?

Sit down and think about all those small, seemingly insignificant purchases. Even if it’s just a few dollars for snacks, over the course of several years this can add up to surprising levels.

Treat these savings as an investment. A child brought up to value money, with an education to provide them with countless opportunities, can offer returns endlessly more valuable to you and your family than any stocks and shares portfolio. And who knows, maybe when they make CEO they can finally get you that yacht.

Can Your Possessions Help Towards Retirement

Your possessions may form the largest part of your capital. One possession in particular is probably the most valuable thing you own. You’ve probably been paying for it most of your adult life and you may still have a long way to go. It is of course your home.

Admittedly, using the family home to fund retirement does require the return of a buoyant housing market and most often an act of downsizing. Yet realistically, your home could be one of the most valuable assets you possess. By selling and down-sizing, the excess capital can be used to top-up any retirement savings you may already own. It may not be your only plan, but it can serve as a real boost to any savings when you need them most.

Look After Number One

Emotionally and financially, there will come a time when your children become more capable at looking after themselves. Naturally, most parents will want to help out for as long as possible, but there may come a point at which helping their future, severely costs your own.

Like it or not, as we age we need support, and this usually requires money. Pouring resources into your children’s future with no regard for your own can ultimately be detrimental to everyone. If you don’t adequately prepare to support yourself, you run the risk of shifting the burden of care onto your children. This is especially important to understand as your children could be supporting families of their own and may be unable to support you as well.

It may feel selfish, but preparing for your own retirement can help protect your children from further financial burden later in life. For this reason alone, thinking of your own future is important too.

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John Hughes writes for YourWealth.co.uk ,  a site that specializes in offering consumers access to financial information, products or advice according to their needs.

Image courtesy of photostock / FreeDigitalPhotos.net

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