How can I convince my young adult children to buy life insurance and save for their retirement?
Too often I see people have deaths in their families and then they have to ask others for the money to bury them and also the surviving spouse and children have to find a way to get that income replaced.
Public Comments
- There are many resources on the Web that show how saving early in life pays off much more than saving later, and how much more you need to save to catch up. Some sites have compounding calculators that will estimate returns based on a different assumptions for rate of return and saving rate. Motley Fool has a lot of great advice that's easy to understand, even without a financial background. There are many, many people that have been warned but still don't think a bad thing can happen to them. I think they need real examples: people who prepared for the future and weathered the storms, and those who didn't prepare and suffered the consequences. Then they can compare and decide which situation they want to be in. Of course, some people refuse to believe that the unexpected can happen to them!
- You can't. You've done what you can to teach your kids about money. Now it's up to them.
- Well, I guess you could shower them with statistics, but I doubt they'd really listen. The statistics and actions that got me to pay attention were: The average life expectancy at retirement age is at least 20 years. Most of us focus on 73, which is the life expectancy of a baby. By the time you get to 65, the people who kept the average down have already died. Planning on supporting myself for another 20 years after working for only 40 is sobering. Even with stupid math, it suggested I'd better save 1/3rd of my take home pay so I can eat later. Knowing this it was pretty easy for me to sign up for a 401K at work--at first I did the minimum to get the match, every time I got a raise, I ratcheted up the % and quickly became one of those people who put 15% aside. (Sometimes you can look at the family tree and see the obvious. Relatives who lived to be 90 or 100, relatives who were dirt poor because they didn't save....) The years just after I started working full time, the traditional IRA was created. My father and mother sent me a $1000 gift and told me I was to use the money to open and fund an IRA. This is a gift to get you started. (When the ROTH IRA came along, he sent a check that year too...but that year the check went instead to my checking account because I had already funded the ROTH by the time he made the gift.) The average funeral *does* cost $7000. I don't have any special pre-needs funeral insurance (it isn't a particularly good deal), but I've "budgeted" for it. A local financial columnist is a proponent of the idea that when you retire, in order to not have your money run out, you can only use up 5% of your total assets per year. You would then add this to your social security benefits and you'd better be able to live on it. I can name at least 3 people at work who retired and then came back to work because they realized that they were spending waaaay more than the 5%. Plus, I don't know when, but I fully expect there will be further attempts to make getting social security and medicare "means tested"--such that you will have to be poor to qualify. My goal is to flunk that test should it ever come to pass.
- Sometimes gentle guidance and good advice is never heeded. I would suggest... if you can and agree...telling each of your childen that the money you usually spend on them for their birthday, Christmas, anniversary etc is now going to be placed onto a life insurance policy that you have taken out for them. Many insurance policies can be inexpensive and require no medical exams. Believe me they will thank you in the future. ;) Just my thoughts. Hope it helps.
- I agree....when I was younger, I carried enough life insurance through my employer to pay for a burial and any outstanding debts, credit cards, my car, moving expenses, etc. It made me feel good knowing if something happened to me, my parents wouldn't need to worry about anything, and I always made sure they knew WHO the policy was with and ow much they were supposed to get. As a mother, my husband and I carry enough, should we die together, enough for another family member to raise them without burdening their own finances, plus take care of our expenses as well. I carry a $25K policy on each of my children, because if something happened to one of them, I sure as heck am not going to feel like working for awhile. The retirement, you are going to just have to cram down their throat. My father currently gets about $5K a month in retirement, owes NOTHING on his house or his car, and he told me once that technically, he could live on as little as $800 a month, and have money left over....if he absolutely had to....b/c he doesn't owe anyone anything and he did a major rehab on his house right before he retired so it would last the remainder of his life. In his retirement, he sure doesn't worry about a darn thing....to me, that is worth everything, and my goal as well. In sharp contrast, we have a close family member, a married couple, one is 81 and the other is 73...he is working a part-time job and she is still working 10 hour days at hers.....because they have a large mortgage that they continuously refinanced to pay off other debts, and no end in sight. I would guarantee they would probably wish they had done things differently.
- Here is my 2 cents. You have to teach your children the best way you know how. You have to find the tools you need to teach them and then they have to make their own decisions. Know your limits and go from there. (Dave Ramsey has a lot of info on this one). I will suggest you check out a few sites, you can read a lot of information for yourself and then if you feel comfortable with it, share it with your kids. http://www.youneedabudget.com/ - talks about and provides easy tools to manage your money - geered towards young adults. But works for everyone. http://www.daveramsey.com/ - talks about getting out of debt and managing your money. - You can listen to some video's he had on youtube. http://www.youtube.com/results?search_query=dave+ramsey this is really good to listen to also. Get a hold of the movie "Maxed out" a little scary, sad and depressing to watch, but if this does not scare most people into trying to get their money managed, I really dont know what will. http://imdb.com/title/tt0762117/ Good Luck.
