How To Help Your Parents Retire And Save For Your Own Future

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If your parents are nearing retirement, you might find yourself beginning to wonder what their plan is for living off of their savings — or if they even have any savings to live off of.

According to a 2020 AARP report, almost one-third of adults with at least one living parent are providing financial support to them. What’s more is that over 40% of respondents expect to provide support to their parents in the future. And for many adult children from immigrant families, it’s extremely common for them to financially support their parents in retirement.

Saving and investing for your own future is hard enough, especially thanks to the rising cost of living, student loan debt and the cost of raising a family. And when it comes to doing all of that on top of helping your parents retire, it can feel like you’re in between a rock and a hard place.

So Select spoke to Delyanne Barros, the Founder of Delyanne The Money Coach, for tips on how to strike a balance between the two. Barros grew her own net worth to $1.05 million, at the time of writing this article, and is taking steps to retire early and retire her mother.

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Talk to your parents about the state of their finances

Discuss options for supplemental income for your parents

Make sure you’re comfortable with your own budget

Keep contributing to your own 401(k) account

Your employer sponsored 401(k) account is one of the simplest ways to start saving for your own future. With a 401(k), a portion of every paycheck is automatically deducted and invested into your account (some employers even match your contributions so your balance grows even faster).

The money you contribute is pre-tax, which means it’s already invested before your paycheck hits your bank account so you don’t even miss it. If you’re having a hard time splitting your paycheck between purchases and savings, your 401(k) account can take away the hassle. So even if, after taking care of all your expenses, you can’t afford to help your parents save for retirement and save for your own future, at least you’ve already been contributing to your 401(k) account.

Barros credits her 401(k) account as one really important way she was able to become a millionaire before age 40.

“I started investing in 2011 when I was 28 through my 401(k), so i started early and although I wasn’t putting in much, I was still investing consistently,” she explains. “I would increase my contribution rate every single year as my salary increased.”

Additionally, on top of your 401(k) you could contribute an additional $6,000 a year by opening up a traditional IRA or Roth IRA. A Roth IRA is a great tool when it comes to saving for retirement since you can contribute after-tax money that gets invested, grows tax-free over time and can be withdrawn without paying taxes.

There are lots of Roth IRA providers out there, like Vanguard and Ally Invest.

vanguard

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Vanguard account, but minimum $1,000 deposit to invest in many retirement funds; robo-advisor Vanguard Digital Advisor® requires minimum $3,000 to enroll

  • party

    Fees may vary depending on the investment vehicle selected. Zero commission fees for stock and ETF trades; zero transaction fees for over 3,000 mutual funds; $20 annual service fee for IRAs and brokerage accounts unless you opt into paperless statements; robo-advisor Vanguard Digital Advisor® charges up to 0.20% in advisory fees (after 90 days)

  • Bonus

  • Investment vehicles

    Robo advisor: Vanguard Digital Advisor® IRA: Vanguard Traditional, Roth, Rollover, Spousal and SEP IRAs Brokerage and trading: Vanguard Trading Other: Vanguard 529 Plan

  • Investment options

    Stocks, bonds, mutual funds, CDs, ETFs and options

  • Educational Resources

    Retirement planning tools

Ally Invest®

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for Self-Directed Trading. $100 minimum for Robo Portfolios

  • party

    Fees may vary depending on the investment vehicle selected. Self-Directed Trading has zero commission fees for stock, ETF, options trades; $0.50 per options contract. Robo Portfolios have zero management fees

  • Bonus

    You may be eligible for up to $3,000 bonus cash when you open an Ally Invest Self-Directed account

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs, options, mutual funds, margin account and forex trading

  • Educational Resources

    Offers informational articles to help users improve their understanding of investment strategies and market trends

Talk to your siblings about pooling together your resources

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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