Retirement planning can be a difficult subject to tackle. And it can be especially tricky when trying to help aging parents prepare for this transition. However, planning for these golden years can require a different sort of preparation for a single-parent as opposed to a two-parent situation.
This is the situation I'm in with my own mother, and I can contrast it with the retirement plan situation of my in-laws. In the process, I've noticed that there are certain areas in which helping a single parent plan for retirement can be a bit more difficult than when there are two parents involved.
An Extended Drawdown Timeframe
Without a backup in the form of a spouse or significant other, it concerns me that my mother might outlive her retirement savings. For this reason, and paired with the fact that there is a tendency toward longevity in our family, I've extended the timeframe we've put together for her retirement drawdown plan.
When I say drawdown, I'm referring to the amount that my mother can draw each month from things like savings accounts, certificates of deposit and her retirement account. Since she will be retirement at around age 66, I've drawn up a 25-year drawdown plan, just to be on the safe side. This way we safely get her to at least age 90 without cutting things too tight.
Ensuring an Income Overlap
In addition to an extended drawdown timeframe, we have also put together a plan that provides her with a little more money than she actually needs each month. While the amount isn't significant -- only about $300 -- it's a financial buffer nonetheless and it provides her with some added peace of mind when it comes to those unexpected costs that always seem to come along when we least expect them.
Applicable Reserves and Debt Reduction
The next portion of my mother's single-parent retirement plan that I've worked on honing as she nears her official retirement date is that of debt and financial reserves.
As my mother neared retirement -- over the past 10 years or so -- we've made a conscious effort to focus on her outstanding debt. In the process, we've been able to free her from items such as a mortgage, a vehicle loan, and her credit card balances are paid off monthly. And as an artist, she is planning on giving private art lessons in her retirement. In this way, she hopes not only to earn a little income, but keep more of her retirement income by not paying it toward interest on debt.
Outside Support Structure
When there are two parents involved in a retirement situation, you can kind of count on them to assist one another. And in my in-laws' situation, there are four children (five counting me) who can help out as well. But in my mother's case, she only has me (and I live 2000 miles away), and therefore, it's somewhat of a different situation when it comes to a family support structure.
To compensate for this lack of support, my mother is planning to move closer to us once she retires. This will allow me to be closer for health or medical issues, to help with home repairs and maintenance, and to just provide assistance when and where necessary since she has no other close relatives upon which she can rely.
In these ways I hope that we've planned and accounted for the differences between a single parent's retirement situation as compared to a couple's situation. And hopefully we'll be able to make her retirement just as secure without a significant other there to provide additional financial or moral support.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Personal Finance - Lifestyle
- Retirement Benefits
- Retirement planning