34M married with 3.5 and 1.5 year old. Right when our first was born I started a 529 plan and seperate brokerage accounts. Put $100 monthly in each, with the brokerage account for big purchases down the road, braces, car, travel sports, etc…
Recently I stopped contributing to the kids accounts as life gets expensive. I am thinking the most important thing is to take care of our retirement account, then with the surplus work on the kids accounts, which there is no surplus right now.
This is all hitting me and I watch my mother and my mother in law struggling in their later age. One if not both of them will require my support in the next 5 or 10 years as they have no retirement and no assests.
How do people handle supporting themselves, their kids, and their parents?
Posted by El_PonchoVilla
9 Comments
One of the greatest gifts you can give your child is the gift of *not* having to choose between financing their parent’s retirement and furthering their own family’s financial future.
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Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn’t realize you should be asking.
* https://www.reddit.com//r/personalfinance/wiki/commontopics
Ensuring your own retirement needs are met is the most important thing to do as a parent, if you don’t do that and spend too much on help your child along, they may be forced to put things on hold in their life that are super meaningful like marriage, having kids, or their own retirement to back stop your retirement because most kids are not going to sit by while their parents suffer in retirement. This may mean that funding college for them or setting aside money for weddings, cars, first houses, etc.. can’t be done. There is also the idea that these thing don’t have to be done right away, if you fund your own retirement generously then you will have the option to look at your own finances down the line and may be able to gift money at that later point if you are in good shape.
What you’re witnessing with your parents, is exactly what you want to try and avoid as a parent yourself.
You want to take care of your retirement, so your kids don’t have to.
They can survive on their own if needed (all of us do). But you don’t want to add your care on top. So that’s priority.
Then when you have extra, you can pass more to them.
Ideally you want to invest 15% to retirement each year. If you hit that, then you can do more to your kids. So if you were currently doing 20%, then you have leeway to switch to them, etc.
If you’re not able to do that currently, then unfortunately the only solution is more income.
The biggest thing you can do right now is fund your retirement so your kids don’t end up in the same position where they have to care for parents. Also take care of your health if you aren’t already.
If there are things you can cut out / cut back on without making life miserable then I would suggest that to continue funding their accounts. But if this is it then you are still caring for them by funding your retirement.
This is why I stopped contributing to our kids’ 529s for now. Heard the advice “kids can take out loans for school, you can’t take out loans for retirement, nursing home, etc”. Being my parents’ caretaker showed me that the best way I can provide for them is by making sure that burden isn’t on them
All good advice here already but also take a step back and look at where the extra money is going now. Everything is more expensive but you may be able to review your bills to find $100 a month or so to keep contributing if you feel bad not contributing to the kids accounts. Even if it’s $5-10 at least it’ll make you feel like you’re doing something
So this is such a good question. Overwhelmingly, the advice is what you’re doing already – you gotta take care of yourself first, even before you invest for the kids.
Since you started so early on those other accounts, I would just contribute what you can even if it’s $10-15 a month. It will still grow and you have a lot of time to figure that out.
Hopefully your income will increase as you age. I would just caution you to maintain your good money habits and continue to live within your means even as your income grows with your work experience so that you can continue to maximize your investments.
The aging parents thing is really hard and a lot of people in that age bracket are not sufficiently prepared for retirement. If they truly have nothing then what will happen is that Medicare would cover their expenses in a home. You can reach out to an elder attorney for guidance.
So we never went the route of a 529 plan ourselves –
Both my parents and my wife’s parents each set up their own investment accounts for the kids and they contribute way more per month than we ever could and they both outlined they want to cover the kids educations.
From our personal standpoint I contribute monthly to a 401(k) and a Roth at work and then we also put $200/month in a joint investment account for my wife and myself and then a further $100/month for each of our two kids. At present the kids accounts are worth $10K each and conservative estimates put them at around s $150-170K when the kids are 25-30 so they’ll be well taken care of.
We also had to cut saving for the kids’ 529s and paying extra on the mortgage. They’re little like yours are, and inflation is hitting hard. Our retirement first, and then mortgage and kids’ future.