One of the biggest things you can do to ensure the success of your financial plan is to make sure your children have a plan. I have seen so many good financial plans derailed over the years because of parents' need or desire to help out their kids, or grandkids.
The statistics are staggering:
- 35 percent of Americans say they have no money saved for retirement. (Harris Interactive, 2011)
- 56 percent have less than $25,000 saved for retirement. (Employee Benefit Research Institute, March 2011)
Here are key milestones when you can encourage your kids to plan ahead — so they can avoid becoming one of those statistics.
1. Graduation. It's May, a big month for college graduations. Most parents believe that once they get the kids through college, their job is done! Some believe the job is done when their kids get their first career-oriented job. I would say it is not done until your kids develop their first financial plan.
For a new college grad, the focus might be on:
- Needs versus wants
- Getting the right savings rate for retirement
- Building cash reserves and/or
- Determining an appropriate 401(k) investment allocation
- Debt management
2. Marriage and kids. When your child is getting married, that is a good time to consider if they have the right amount and type of life insurance to protect their new spouse.
3. A new baby. Similarly, if your child is having a first baby, planning ahead might include getting educated on college costs and determining which savings plans to consider — as well as possibly increasing life insurance coverage.
Didn't you always say "if only I got started saving earlier …"?
A good financial plan never stops evolving and it adapts to the changes in your life. Help your children get started on their plan today by introducing them to your financial adviser.