My parents are 57 and 60 years old. My mom has some money in a retirement plan that she started seven years ago and can also count on a modest pension. My dad, however, had his own business for a long time and put everything back into it. For the past 5 years he has been part time consulting etc. but not making anywhere near what he used to. All he has is a bank IRA he started a few years ago.What advice should I give them to help them secure a better retirement and not have to work until they are 90? My dad would be especially interested in any books or other resources anyone could suggest for folks who didn't plan ahead.Thanks in advance!
There are plenty of books out there on retirement planning. Most advise to start early.For late starters, I think your parents should begin with a detailed calculation of their net worth and their expected retirement income as well as their expected retirement income needs. Does he still own his business? What is it worth? It sounds as if he did not participate in Keogh or other retirement plans for the self employed. Are there other assets?If this is the case, then their early retirement will depend on deploying the assets they have in a way that generates secure income. The net worth calculation will tell you what you have available.If all else fails, real estate investing could work in this case. If rental property can be purchased at a price for which rental income will finance the mortgage, once the mortgage is paid off, you have a steady flow of income.But take a very close look at redeploying the assets they have. Sale of their home moving into one side of a duplex and renting out the other is a standard strategy. There may be plenty of others. Hopefully you will find assets not previously recognized and be able to convert them to better use.Otherwise, its going to be save, save, save, and they may not get much growth from these savings because time is so short. Still, solid equity investments must be the way to go.Best of luck to you.
That is going to be difficult to do. How much do your parents have saved up? Do they have sizable equity in their business?If they have little cash reserves and little equity, all I can advise is to save, save, save, and invest in equities so that they can take advantage of capital appreciation as best they can.If I were them, I'd try to put away the full amount that they can into a Roth every year until they no longer can. That will be a little nest egg, and that should be in stocks. Your mother will get a pension, so that helps. But, if that's not going to be enough with their social security, they need to get invested and invested now.
<<My dad, however, had his own business for a long time and put everything back into it. For the past 5 years he has been part time consulting etc. but not making anywhere near what he used to. All he has is a bank IRA he started a few years ago.>>What happened to the business? What about selling the business, I'm sure if he put everything back into it, the business should have some significant value?JLC
What advice should I give them to help them secure a better retirement Regardless of how much your parents have now towards retirement, they should be putting $2000/year in an IRA for each of them. This money should be invested in an S&P500 index fund, at least. Leaving it in the bank at 5-6% is ludicrous. As a consultant, if your father works for himself, he should be looking into a Keogh or SEP-IRA, where he can put more money away.As a previous post mentioned, your parents should be looking into reducing their expenses in preparation for retirement, especially if they are not making as much as they used to, and they have less financial resources.Zev
He no longer has the business as of five years ago and it didn't end with him getting any equity out of it. In fact he insisted on paying back his suppliers even though there was some legal loophole he could have used to avoid it.I'm not sure how much detail about their current financial situation (net worth, numbers, etc.) they'd feel comfortable sharing but I am going to forward the advice here. Thanks
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