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  • By Emma Andrews
  • Posted November 2, 2020

How to Help Your Older Parents Prepare for Retirement

Everyone hopes to have a blissful retirement. It’s the time when you’re supposed to be able to fully enjoy the fruits of your life’s labors. In some cases, however, preparation for retirement may be somewhat lacking. If your parents could use some help preparing for retirement, there are some things you can do to assist them.

Analyze Invested Assets

Investing is probably the most common way to build a retirement fund. Most people who are investing in a retirement account have at least one 401(k), an IRA, or both. Managing multiple retirement accounts is certainly possible, but it can be more difficult. It may be beneficial to look into consolidating the different retirement accounts where possible. Thanks to the fact that they share the same tax status, 401(k) accounts can be consolidated into traditional IRA accounts. That isn’t the case with a Roth IRA account though, since they have a different tax status.

Consider Fixed Income

You’ve probably heard about seniors living on a fixed income at some point. An annuity is a source of fixed income that you purchase. The money you put into the annuity is then invested, and you receive regular payments from it. There are annuity companies you can purchase a policy from. Most insurance agents offer annuity options as well. That said, there can be a lot of fees associated with annuities that may make this a less attractive option in retirement. This income will also be subject to taxes, so your parents will need to save some of that income for that purpose.

Address the Living Situation

In some cases, it may be necessary to take a closer look at your parents’ living situation. If they haven’t paid off their mortgage and finances are already tight, going into retirement while still paying an expensive mortgage may not make sense. It might be better to sell the house and downsize to a more cost-appropriate and better fitting living situation. That could mean moving to a smaller house or moving into an apartment or condo. Helping your parents downsize may take some time, so start early and be prepared to be patient. It’s not easy for them either.

Sometimes additional help and perspective can make a real difference in how prepared your parents are for retirement. You can help them by analyzing the assets they’ve invested in, discussing the prospect of living on a fixed income, and taking a closer look at their living situation. Doing so will help them be better able to comfortably live within their means during retirement.

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