I Am My Parents’ Retirement — How This Affects My Savings Strategy
Consider yourself lucky if you grew up with parents who taught you how to save and invest wisely. Seriously, call them after you read this and thank them for two big reasons: First, they’ve taught you the skills you need to properly manage your own money as an adult. Second, they’ll never have to rely on you for money when they’re retired (assuming they practice what they preach).
When I was growing up, however, the extent of my money knowledge was a savings account that I used for my weekly allowance. My parents were very secretive about our family finances and didn’t teach me about saving and investing. In hindsight, I realize it’s because they were clueless too.
Click to read more about how one man is teaching his kids financial responsibility.
The Story of My Folks
A few years back, my parents retired, but they had nothing saved. Absolutely zero. How did this happen, you ask? Well, it’s certainly not because they were lazy. They tirelessly put their nose to the grindstone their whole lives, working seven days a week, 365 days a year. They didn’t know the meaning of sick days or vacation days.
They came to America from Korea in the ’70s. They owned and built several businesses from the ground up. They even bought and sold apartment buildings and property. Financially, they did really well.
In the ’80s, my father worked in real estate, and after closing a million-dollar deal (and receiving a huge commission), my parents decided to open a small market in Los Angeles. Over the years, they owned and sold many businesses, including a fast food restaurant, a bakery and a shoe store. They even relocated back to Korea to open an English academy.
We grew up upper middle class, owning three cars and a big house with a pool. My parents always provided for me and my two siblings. They were (and still are) amazing, resilient and strong human beings. I love and respect them tremendously.
Read: More Than Half of Americans Have Less Than $1,000 in Savings
No Plan Means No Retirement Money
I share this story because this is what happens when you don’t plan properly for retirement. They had no strategy for saving and investing. They didn’t have a plan for the future because they always thought they’d have more time.
Now, my parents have retired, and my sister and I have accepted that we will support them indefinitely. Even with the help of monthly social security checks, there just isn’t nearly enough for them to live off of. Of course, a financial burden like this is incredibly stressful for both parties. I know my parents hate relying on us for money, and for me, giving them a percentage of my income puts a strain on my finances.
There is a silver lining to all of this, however. It’s that I’ve learned from their mistakes. As a result, I’m extremely conscious about my retirement and long-term investment goals. I carefully plan, save and earn extra income. I am mindful of both spending and saving.
More on Retirement Planning: How Much You Should Have in Your Retirement Fund at Every Age
Mistakes and Lessons Learned
My parents are a prime example of hard-working people who made the terrible mistake of not planning ahead. They didn’t know anything about saving or investing. At times, my heart breaks for them because I know they feel guilt and shame for having to rely on their children for money. Mostly, I’m sad because they worked hard their whole lives and had absolutely nothing to show for it.
Being broke when you’re old is not only sad, it’s scary. What if you also get sick or fall ill? Your retirement years should be spent doing the things you love and enjoying life. You have to save and invest wisely while you’re still young so you can set yourself up for the kind of lifestyle you want when you’re older.
Check Out: Most Americans Lack Savings to Pay for These Huge Emergencies
Strategies to Save Faster
If this has been a wake-up call for you and you’re now wondering how you can kickstart your savings, here are my two best tips to get you there.
Side Hustle
Consider picking up a side job to save faster or pay off debt. Because a portion of my income is set to go to my parents, earning side income is crucial for me. Without it, I wouldn’t be able to save and invest as quickly as I want. My side income goes straight to saving and investing.
Save and Invest
Here are some of the moves I made personally with regards to investments that might also work for you.
Maxed out my 401k, IRA and other retirement accounts
Saved at least 30 percent of my income in a high-interest online savings account (30 percent is aggressive, so start with 5 to 10 percent since it’s more manageable)
Automated a portion of my paychecks to savings each month
Used micro-investing apps to round up change from my checking and automatically invest it
Invested in real estate crowdfunding (it can be risky, but I wanted to try it)
Created a money journal to write down all of my thoughts about spending, saving and my money goals (it mentally helps me to be more money-conscious)
The bottom line is to find what works best for you to ensure your future is secure. Start today. Remember: You can’t rely on anyone else to do this for you.
Click to read more about what a comfortable retirement will cost you in every state.
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This article originally appeared on GOBankingRates.com: I Am My Parents’ Retirement — How This Affects My Savings Strategy
