Caught in the Middle

At a time when middle-aged couples should be saving for their own retirement, many find themselves caught in the middle of the competing needs from two generations. Having started families later than past generations, their children may just now be entering college or could still be living at home. At the same time, aging parents may need financial assistance.

While you may have to allocate some resources to the needs of your parents and children, don’t forget your own retirement. At a minimum, consider the following:

• Calculate how much you need for retirement and how much to save on an annual basis to reach that goal. Don’t give up if that amount is beyond what you’re able to save now. Start out saving what you can, resolving to significantly increase your savings once your parents’ or children’s needs have passed. Also consider changing your retirement date or reducing your financial needs.
• Take advantage of all retirement plans. Enroll in your company’s 401(k), 403(b), or other defined-contribution plan as soon as you’re eligible. Also consider investing in individual retirement accounts, either traditional or Roth. All provide a tax-advantaged way to save for retirement.*
• Reconsider your views about retirement. Instead of a time of total leisure, consider working part time at a less stressful job, starting your own business, or turning hobbies into paying jobs.

Don’t feel guilty thinking about your own retirement when your parents and children still need your help. One of the best gifts you can give your children is the knowledge that you will be financially independent during retirement. Please call if you’d like help with your retirement plans.

*Withdrawals of taxable amounts are subject to ordinary income tax and, if made before age 59½, may be subject to an additional 10-percent federal income tax penalty.