If we hadn't celebrated at an Italian restaurant in my neighborhood this past fall, it would have been hard for me to believe that my father actually turned sixty this year. 6-0, seriously?! After I left my home state, my parents remained close to the age of fifty in my mind and this big birthday really caught me off guard. How is it possible that my parents are almost senior citizens? The planner in me immediately started wondering about their financial situation and if they had a plan for retirement.
A recent AARP article pointed out that not only are the majority of baby boomers feeling pessimistic about their financial future, the average retirement savings for Americans between the ages of 55 and 64 is only $120,000. With constantly rising healthcare costs and inflation, this is hardly enough for retirees who are living longer than ever.
Do you know where your parents fall amongst the national averages?
What my parents did right:
Choosing the right jobs
My parents are both fortunate to have chosen jobs that offer a pension at retirement. Additionally, my mother has worked for the state for over ten years and therefore is eligible to inexpensively buy into their healthcare coverage for the rest of their lives.
Making smart real estate investments
They purchased a home in an up-and-coming coastal city that significantly increased in value in a short amount of time. This provided them with the opportunity to buy a larger home that has doubled in value over the past twenty years. Score!
Living within their means
Despite earning a decent upper middle class income, they have always lived within their means and never accumulated consumer debt. My sister and I were always well provided for, but materials possessions were always kept within reason.
Where there was room for improvement:
My father recently admitted to me that they have never kept a budget. They are extremely lucky that this never caused an issue for them.
Despite living within their means and making a solid collective salary, my parents might be in trouble if it were not for their pensions and social security.
Readers: Have you had “the talk” with your parents? How is their retirement shaping up?