How to Help Your Parents Catch up on Their Retirement Savings

Mature couple reviewing and signing domestic finances and investment paperwork in kitchen at home.

If your parents started saving for retirement late or just fell behind, you may fear that they may not achieve it. Looking at the blanket numbers of how much they ought to have saved by now, it's easy to see why you're worried. While it's OK to feel that way, it's not too late. Anyone can start retirement savings at any time. Experts say the best step to take is to find out what you and your parents can do right now to catch up.

And to help you do exactly that, here are five hacks to consider.

Take Full Advantage of Employer Match for Retirement Savings

Do your parents have a workplace 401 (k) that offers an employer match? Help them boost their retirement savings by claiming the full amount.

An employer match is typically free money. It is also one of the surest ways to earn a guaranteed 100% return on your investment.

If they make the most of it every year, they could save hundreds of thousands of dollars in retirement. So advise them to talk to their employer about it. Let them find out what they have to do to earn the full amount and help them contribute enough money to get it.

Maximize Tax Breaks for Retirement

Apart from employers, the government can also help you boost retirement savings. Your parent can get help from Uncle Sam whether they have a job with a retirement plan or not.

There are several tax-advantage retirement accounts to choose from, ranging from IRAs to 401 (k). The secret here to take advantage of the tax breaks for retirement.

For example, if your parents invest $1,000 in a traditional 401 (k) or IRA, they get a tax deduction when they contribute. And if they're in the 22% tax bracket, their taxable income reduces by about $780.

Find Ways to Increase Income

The more money your parents bring in the more they have to save for retirement. So find ways to increase their income.

For starters, ask them to negotiate a raise at work. Next, help them develop other income-generating activities like starting a side hustle, passive income, and taking on side jobs.

Tap Into Cash Value Policies

Although experts recommend tapping into insurance policies for cash as a last resort, it may make sense if the original need for the coverage is no longer in the picture.

But before doing so, it may be wise to access its cash value. If you're not sure, talk to an insurance professional for guidance.

Help Them Identify Budget Cuts

One of the best ways to help your parents save more money is to help them look for savings in their monthly budgets. Have them set a goal to save $200 and find expenses to shave off their budgets.

For example, you may ask them to get better deals on their car insurance, cancel subscriptions and memberships, giving up their annual vacation, and eating out less often. These choices will not be easy, but help them see that they're sacrificing now for a better tomorrow.

Get Professional Help With Retirement Savings

If you feel overwhelmed after trying everything, don't hesitate to consult an expert. A financial advisor for instance can help your parents figure out what they need to invest to meet their retirement goals.

An expert can also help them adjust their goals depending on their current resources. Just make sure you take action. When dealing with retirement, saving something is way better than having nothing. And if you don't take action now, you may be forced to help them out later, something that could jeopardize your financial future.

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