Retirement
Even if you’re contributing to a 401(k) or similar plan, you’re probably still eligible to contribute to an IRA. Like a 401(k), a traditional IRA offers tax-deferred growth potential, while a Roth IRA can provide tax-free earnings distributions if you’ve had your account at least five years and don’t take withdrawals until you’re at least 59½.
Children’s Education
If you devote most of your investable income to your retirement plans, you may not have much left to help pay for your children’s college education. But that may not be a disaster – after all, they could get scholarships and financial aid.
And even if they need to take out student loans, they have a lot more years to pay them back than you have until your retirement. If you can afford to help your children, choose a smart college-savings vehicle, such as a 529 plan, which offers tax-free earnings distributions as long as the money is used exclusively for qualified higher education expenses. (If it’s used for other purposes, you’ll be taxed on it and also could face a penalty.)
Aging Parents
- Have they named a durable power of attorney?
- Have they chosen an executor for their estate?
- Have they thought about they would pay for any long-term care services they might need, such as a nursing home stay?
It may not be that easy to have these conversations, but they are important — especially if you are going to play an active role in your parents’ plans.
Clearly, as a Gen Xer concerned about retirement, college-age children and aging parents, you’ll have a balancing act involving both money and time. But with planning, patience and realistic expectations, you can help yourself and the ones you love.
•••
Courtesy Edward Jones Investments – Julie K. Tauriainen, AAMS® Financial Advisor – Heidi Bohn, Branch Office Administrator – 9055 Soquel Dr. Suite D Aptos. Tel # 831-662-4565, Email: Heidi.Bohn@edwardjones.com