1 in 10 Workers Say They’ll Count on Help From Their Children to Cover Retirement Costs. This Might Be a Better Move

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Do you really want to burden your children financially when you’re retired? If not, read on to see how you can avoid that. 

It’s an unfortunate fact that a lot of people wind up cash-strapped in retirement. And in those situations, sometimes, adult children can wind up getting burdened at a time when they’re also trying to raise families of their own.

But while it’s one thing to have to fall back on your grown kids in a pinch, it’s another thing to plan on it. And in a recent Natixis report, 12% of respondents say they’ll count on help from their children to cover retirement costs.

If the idea of that doesn’t sit so well with you (or your kids, for that matter), then it’s imperative that you ramp up your IRA contributions. Saving more money consistently could make it so you’re able to cover your own retirement expenses without having to turn to anyone else for help.

It pays to prioritize your IRA

Funding an IRA can be a difficult thing when you have various bills, from car payments to a mortgage loan, to cover. But if you don’t make an effort to prioritize your IRA, then not only might you suffer once your retirement rolls around, but your grown kids might suffer, too.

Unfortunately, many of the expenses you face during your working years are expenses you’ll continue to be on the hook for in retirement. You might manage to shed a few costs, like commuting expenses and, if you’re lucky, your mortgage. But you’ll still need to pay for transportation, food, utilities, and healthcare, among other things. And it’s important to build up a solid enough nest egg to cover those costs in full.

So, let’s say you’ve been putting IRA contributions on the back burner to the point where you only have $5,000 in savings, but you’re also 50 years old and still a good 15 years away from retirement. At that age, your annual IRA contribution maxes out at $7,500 (the limit is $6,500 if you’re under 50 years old).

If you manage to sock away $7,500 in an IRA for the next decade and a half, and your investments generate an average annual 8% return, which is a bit below the stock market’s average, you’ll end up with an IRA balance of almost $220,000. That, combined with income you receive from Social Security, may be enough to help you avoid hitting up your grown kids for money later in life.

Also, do note that the current $7,500 annual contribution limit for IRAs will likely increase over time. If it does, it would pay to ramp up your contributions accordingly.

Make that commitment

You might think you’re doing right by your kids by spending money on them and putting less into your IRA. But if you don’t make your IRA contributions a priority, you might end up significantly burdening your children during their adulthood.

If that’s a situation you want to avoid, take a closer look at your spending and make changes that allow more money to land in your IRA. And if you’re older and don’t have too much time left before retirement, definitely do your best to max out your contributions from now until your career wraps up.

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