Money Conversation with Your Kids
Planning for retirement sometimes is filled with numerous preparations. One step at a time you put your life and your finances in order so that the remainder of your years are spent enjoying the lifestyle and security you have worked so hard to achieve.
Preparing for retirement includes steps to prepare your children for the decisions you have made. Sitting down with them and laying out your plans is an important step in the process and one that can prevent misunderstandings and mistakes along the way.
Let Them Know Long Before the Retirement Party
When the timeline for retirement grows closer, make sure that you fill your children on on the development of your plans. Some experts advise letting kids in on it when you are about five years away from retirement to prevent catching them by surprise. If your plans include downsizing to a smaller home or a move to a new location your children may need time to prepare.
Retirement means a change in lifestyle. For some people, this means a reduction in monthly purchases. Inform your children of these changes so that they can be prepared and less likely to worry that you are struggling financially.
Set Them Free
Children who are financially dependent on you may need time to get their own houses in order. Your retirement plans could very likely require you to pull back any financial support. Chances are you may need to issue deadlines to your kids if they need to begin paying for their own cell phones, insurance, or rent each month.
Cutting your kids off financially can cause rifts in your relationship. It may help to hold a conversation long before the time frame becomes critical. Help formulate a plan to remove your children from their dependency on you. Keep them involved in the process so that they have the time to prepare themselves and their own financial future.
Communicate Your Plans
Nearing retirement means you are getting older. Any discussion about aging requires a reality check about the potential effects of illness and other conditions can have on your lifestyle. Now could be an ideal time to lay out your plans and your wishes to your children, especially if they could be be tasked with making decisions for your future.
Communicate your wishes and desires and inform your children where important documents are located. Include a medical power of attorney, financial power of attorney, and other medical directives along with other financial documents. If you choose one of your children to act as an executor in your will or a beneficiary to insurance policies you will need to provide them with copies of your documents.
Discuss Your Final Plans Now
While the topics you might discuss with your children prior to your retirement might include your finances and your travel plans, it may also be a good time to fill them in on your final wishes. A discussion about your funeral plans may not be a fun conversation to have, but it is an important one.
Disclosing your wishes for your belongings now is another part of sharing your final plans. If you have multiple children and grandchildren giving them explicit directions about who gets what when you pass on may help save years of sibling strife in the future.