If you are looking for financial tips that will help you leave an inheritance for your kids – we have some good news for you. While leaving money to your kids or grandchildren will help them, this is not a guarantee that it can contribute to their financial security. Truth be told, you can leave your kids with no money but you can still help them have a healthy financial life.
According to the data published in CNN.com in 2013, 44% of retirees do not expect to leave their family anything when they pass on. This does not necessarily mean they are struggling because their retirement money is not enough. The thing is, it is only enough for them to live on. They cannot leave a substantial amount to their loved ones when they are gone.
This is where retirees can really benefit from financial tips. The only way that you can really take care of your finances and make the right decisions about it is when you educate yourself about it. The goal here is not concentrated on leaving an inheritance to your loved ones. While that would be great, it is unnecessary. Do not put too much pressure on yourself to leave a financial inheritance. The best thing that you can do for them is to learn how to manage your finances well while you are still alive.
Money management for retirees will allow you to stretch your finances so it will outlive you. When you are retired, you no longer have a stable source of income. Chances are, you will be living off your Social Security benefits and the retirement money that you saved while you were younger. Although your retirement fund will continue to earn through compound interest, a market crash can compromise that. Make sure you understand how you can take care of your personal finances so you do not have to worry about your children’s lack of inheritance.
5 ways you can help your kids financially despite a lack of inheritance
If you look at the statistics, you will understand why a lot of retirees are not confident that they can leave an inheritance. According to the data from Fool.com, the average net worth of those who just entered retirement (65 to 69 years old) is $194,226. This amount includes the value of their home. If you only consider the cash that they have, the amount goes down to $43,921. The older retirees (75 and older) have a net worth of $155,714. Without the value of their home, their net worth becomes $20,366.
As you can see, the amount is not something that can be expected to last long enough to leave an inheritance.
But as we said, do not worry about it. There are other ways that you can ensure that your kids and grandkids will be financially okay even if you do not leave an inheritance. Here are 5 things that you can do.
Do not leave debt. Admittedly, debt is something that you cannot pass on. No matter how much you owe, your children will not be bothered by the debts that you left behind. However, your possessions will be taken to pay for these unpaid balances. You do not want to compromise what little you have left. Your kids can still benefit from the windfall money of what will be left of your retirement fund. And if you have a home, that would have been filled with memories. You do not want that end up with a stranger just because the property was used to pay off your multiple debts.
Get your financial position in order. As you take care of your debts, putting all other areas of your finances in order is also something that you may want to do. Talk to all your children – or at least the one that you trust the most. Let them know of all the bills that you had been paying. Or better yet, make a list of all your accounts, debts, payables, etc. This is probably one of the best financial tips that you can follow. We never know when our last day will be. It is best to be prepared. Not only will it help your kids understand your financial position once you are gone, it will also help you be organized while you are managing it.
Live below your means. Although you may not expect to leave them with inheritance, you can certainly try to do just that. You can try living below your means. Sometimes, retirees splurge during the first few years of retirement. Try to avoid living beyond your means if you can. If your retirement fund allows to you to get around $2,500 a month, you can live off less that amount and save the rest. Of course, you do not want to compromise your comfort. But having an emergency fund besides your retirement money is a great way to be prepared for any unexpected expense. This will keep you from becoming a financial burden to your loved ones when you get sick.
Help them save. There are a lot of ways that you can pitch without having to give your children or loved ones money. For instance, you can choose to live near them so you can watch over your grandkids while their parents are working. This will help them maximize their earning potential without spending too much on child care costs. If your kids have a basement or a garage that they do not use, you can talk about renovating it so you can live with them without necessarily invading each other’s privacy. Living near each other will make helping each other easier.
Take care of your health. This is not a directly a part of the financial tips but it can significantly affect your finances anyway. This is why we are including this. Medical costs are skyrocketing in this country and being healthy is one of the best ways you can take care of your health. Live a healthy lifestyle and eat healthy food. This will allow you to save a lot of money on health care costs.
Post-retirement tips that will help your money outlive you
If you really want to leave your loved ones with an inheritance, you may want to make sure that your retirement fund will outlive you. Here are some financial tips that will make this possible.
- Keep on checking your budget. Your needs will still change so do not expect that your budget when you entered retirement will be the same in 5 years or so. Consistently check your budget plan and make sure you follow it.
- Be cautious about cash gifts. While your retirement money may seem like a huge amount of money, do not feel guilty about saying no to your loved ones if they come to you for financial help. You can give cash gifts but do not abuse it. Make sure that when you give, it will not compromise your money. Saying no can save you from a financial crisis. After all, if your retirement money runs out, you will end up being a financial burden to your kids. This might not be a position that you want to be in.
- Downsize your lifestyle. This is a given. When you are retired, your kids are no longer with you. Living in a smaller home is usually a good idea. Not only that, the services that you used to pay for – you now have all the time to do it yourself. Keeping yourself active will keep you healthy anyway.
- Update yourself on market trends. According to Investopedia.com, the early years of retirement is usually the most expensive. You will be confident about funding your travel and hobbies. This is not wrong but you need to be cautious about it. Make sure you are aware of the market trends so you will know how your money is growing. Try to stay within the amount that your money is growing so you will not compromise it.
- Take care of yourself. We will state this again. It is very important to keep your physical body healthy. Do as much as you can to eat healthily and to exercise without overexerting yourself. This is a great way to keep your health-care costs low.
These financial tips will not really guarantee that you can leave an inheritance but it will ensure that you will not be a financial burden to your loved ones after you retire.
Common questions about financial tips for retirees
Question: What are the best financial tips for retirees?
Answer: Most of the financial tips that retirees will benefit from involve how they can make their money outlive them. We never really know how long we will live but it pays to be prepared. You want to stretch your money without necessarily living a deprived life.
Question: Why do you need to listen to financial tips?
Answer: Sometimes, getting the opinion of someone else will give us a fresh perspective. It is healthy to know how you can manage your finances based on the opinion of someone who has a different experience than you.
Question: How can you identify the financial tips you will follow?
Answer: Start by understanding your own financial goals. When you know your financial future, you can easily filter through the many financial tips out there. You can choose which ones will help you reach your goals.
Question: Are there financial tips specifically for seniors?
Answer: This is mostly about managing your retirement money. Sometimes, it is easy to splurge – especially when your retirement fund seems so big. Keep in mind that this is the money that you need to stretch for a decade or two. Do not act like a one-day millionaire.
Question: Who can I turn to for financial tips?
Answer: That depends on you. Ideally, you want to listen to someone who understands where you want to go or end up in your life. Listening to fellow retirees should be a great start.