As your retirement years begin to creep up on you, it’s common to start thinking about what type of legacy you want to leave behind for your loved ones and how you intend to support your family for generations to come. In terms of financial preparation, every couple, individual, and family will approach things a little differently. Although your life may change course from what you expected, even in your later years, what’s most important is that you start early and plan for retirement in each decade of your life to ensure you’re prepared and can support your family no matter what.
Below we’ll outline some ways you can contribute to your family’s wealth, allowing you to feel at ease and focus on what matters most during your retirement years.
1. Plan to pass down a business
If you’re an entrepreneur or own a business of any sort that can be inherited by your children and future generations, this is a great way to pass down wealth. Especially if you’ve worked hard to get out of debt and are now benefiting from your business gains, this can be a very lucrative opportunity for your children. Of course, not all businesses can be passed down or there may not be interest in taking over, which you can consider selling and sharing that wealth with your loved ones so they can build a dream of their own.
It’s a good idea to have honest conversations with your descendants to help you set them up for a successful and fulfilling future, whether that means they follow in your footsteps or trailblaze their own business idea. Considering all avenues of this process is important, especially if you’ve built a large company since your employees and investors are also at stake in this decision. From transferring the correct documents to having experience in the business, preparation and organization are key to successfully passing down a family business.
2. Estate plan strategically
It’s not uncommon to consider downsizing, moving, or purchasing a new home in retirement depending on your future plans and goals. Should you have a seasonal home, want to be closer to family, or feel as though your current home might be difficult to navigate in your older age, you might be looking for a new place. If this is the case, it’s helpful to consider what type of mortgage you’ll want based on your age and finances. Many seniors opt for a 30-year mortgage to benefit from lower monthly payments over a longer period of time, but if you have the funds there might be an even better option for you. There are many benefits of a shorter-term loan in your later years, first and foremost being able to pay it off quickly without facing penalties if you want to pay it off even sooner. A 15-year fixed mortgage rate is a great option that also allows you to avoid mortgage insurance with a 20% down payment and keeps your rate consistent, so no need to worry about rising fees or reallocating your budget.
If you’re worried about who will pay your mortgage after you’re gone, your family will be able to sell your home to repay the remainder of the mortgage. They may even decide to keep it, in which case you can set up a life estate and set some finances aside or allow insurance to cover the cost of the mortgage. You can include any other assets related to your home or estate that you’d like your loved ones to inherit.
3. Invest in your children and grandchildren’s education
According to Forbes, the average student loan debt has now reached $28,950 per borrower, with $1.75 trillion in total owed. Since the cost of a college education has continued to rise over the last few decades, the need for financial aid and student loans has also been increasing. Although costly, a college education is a requirement for countless professional programs and higher degrees, making it an invaluable resource. If you’re interested in the ways you can positively impact your future generations, invest in their college and professional education. Doing so can allow them to start their life off debt-free, or close to it. Many professionals remain in student loan debt for much of their life, which can prevent them from living the way they’ve always dreamed of.
4. Secure a life insurance policy
When it comes to future financial peace of mind for your loved ones, securing a life insurance policy is one of the most important steps. A life insurance policy allows you to create a plan should anything unexpected happen to you, such as death, serious injury, or illness in which you can no longer support your loved ones. Setting up a safeguard can allow you to feel peace of mind knowing that your family can focus on the important things during a difficult time rather than feel stressed about finances. It’s recommended to purchase life insurance as you approach major life milestones such as marriage, starting a family, and preparing for retirement, and it’s important to know you can always adjust your policy based on your needs. If you’re already in retirement or wondering if you still need life insurance after 60, you might want to consider your situation. Should you have dependents or children, or simply want to leave a legacy, you might want to keep your policy through those early retirement years.
5. Help family members become financially literate
Encouraging conversations within your family dynamic that surround finances and money can be more valuable than you may realize. It’s shocking to learn that many families don’t discuss finances and therefore when it gets passed down, children or loved ones don’t know what to do with their wealth or how to invest the money they inherit to benefit them long-term. That is where the generational wealth statistic, “70% of wealthy families lose their wealth by the second generation and 90% by the following generation” comes from. That being said, it’s extremely beneficial to show your future generations the value of money, along with ways to spend, invest, budget, save, and prepare wisely. Generational wealth can be a blessing or a curse. Allow your loved ones to benefit from your hard work by encouraging them to discuss finances and continue to grow their financial literacy throughout their lifetime to pass it down once again to their children.
When it comes to retirement planning, there is so much to consider. Make sure you aren’t only setting yourself up for enjoyable years ahead, but also leaving the legacy you’ve always intended. By being proactive with some of these ways to contribute to your family’s wealth and preparing ahead of time, you can retire with peace of mind knowing that your life is meant to be enjoyed.
Insight Wealth Strategies, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Insight Wealth Strategies, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Insight Wealth Strategies, LLC unless a client service agreement is in place.