Essential Financial Planning Tips To Secure Your Future And Protect Your Kid's Inheritance
Never be afraid to look ahead in life. Everyone tells you to focus on the “now”, but that doesn’t make a lot of sense when you’ve got a family. Yes, you need to ensure your family lives comfortably and your kids are safe and health - yet you also have to plan for the future. There must be a plan in place to help your kids later in life, and you should think about securing your own future as well!
On that note, this blog post will explore some essential financial planning tips you can use to prepare for the future. The main goal is to plan a way for you to have enough money to support both yourself and your kids when you’re older and stop working. This could be many years or decades away, but the sooner you start, the more money you can save. It’s also a way of protecting your kid’s inheritance when you eventually pass away. Nobody likes thinking about this, though if you don’t, then you may risk leaving your kids with nothing.
So, where should you begin?
Set Up Savings For Retirement
Even if your retirement is many years away, you should start saving for it now. In fact, the ideal time to save is when you get your first job. Putting a chunk of your earnings in a retirement pot for as many years as possible will maximize how much is left to fund your golden years. Loads of retirement plans exist and most individuals will have a 401(k) from their employer.
Nevertheless, this might not be enough! It’s also worth setting up high-yield savings account to store money away for the future. These accounts are designed for people who want to tuck their money away and, effectively, forget about it for decades. It sits in the account and generates interest until you need to use it.
This is perfect for retirement savings - and a lot of the accounts with the best interest rates have rules on when you withdraw money, which stops you from taking the cash out too early. Having one of these accounts alongside your retirement plan will help you get even more money for retirement. This will help you support yourself as well as supporting your kids if they need it.
Pro Tip: Use this retirement savings calculator to estimate how much money you need to save for retirement. It’ll break things down so you understand how much to save per month or year until you retire.
Buy A House
Those of you who already own a house are in a very fortunate position. Of all the long-term investments out there, houses are the best. Nothing will appreciate in value while carrying almost zero risks quite like a house. The data backs this up: the average sales price of houses in the US went from $331,400 in 2014 to $519,000 in 2024.
That is ridiculous.
Rewind the clock another 10 years and homes were selling for close to $250,000 on average. In theory, if you’re due to retire in 10 or 20 years, your home could be close to double its initial value. Renting may hold some benefits, but if you truly wish to secure your financial future and protect your family’s inheritance, you need to get on the property ladder.
Owning a home gives you many options. For starters, you can sell it when you retire and your children have flown the nest. You might not need a house that big anymore, nor are you tied to a specific location. Downsizing presents a more financial sound option and can leave you with an extra few hundred thousand dollars in your bank balance!
Moreover, owning a house means you have an asset to pass down to your kids. You could do this while you’re alive and find somewhere else to live, or you can leave it as part of their inheritance. Either way, the money from this house could be enough to help your kids buy their own home or feel more financially stable when you’re gone.
Be Ready To Invest In Senior Health Insurance
Do you know how much money you could spend on healthcare later in life? According to reports, healthy couples will spend around $13,000 a year on healthcare between the ages of 65 and 74. This figure rises as you get older - and it doesn’t take into account people with underlying health conditions.
In other words, your health will cost a lot!
You don’t want to be in a position where a huge chunk of your annual retirement fund gets spent on healthcare. It diminishes how much money you have to enjoy your retirement and reduces your children’s overall inheritance. Focusing on preventative care now, while your younger, can lower future health costs. As will following a healthy diet and lifestyle by eating well and remaining active.
However, you should also invest in affordable health insurance for seniors. Different insurance plans exist to make healthcare more affordable when you retire. These plans often combine with Medicare and Medicare Advantage to reduce healthcare costs and stop you from paying too much money out of pocket. For a small premium, you get extensive coverage for things like hospital visits, checkups, tests, and so on.
Think of this insurance as a little security blanket over your finances. The cost of premiums is exponentially lower than paying for everything out of pocket. Instead of spending $13,000+ a year on healthcare, you may only spend $3,000 max. In ten years, you’ve potentially saved $100,000 here alone!
Work Hard To Be Debt-Free
Try as hard as you can to pay off debt before retirement. This presents two significant benefits:
It reduces your monthly financial burdens when you retire
It stops your kids from inheriting the debt
If you have credit card debt or loans, get rid of them as quickly as you can. This might not be easy, but look into different debt solutions to help you get started. The fewer debts you have, the lower your financial burdens become. It maximizes your retirement savings as money doesn’t have to go towards paying someone back.
As noted above, debt is terrible for your family’s inheritance. Why work hard all of your life, only to leave your kids with debt. Sure, you leave behind plenty of assets, but they have to spend most of your money or sell your investments to appease creditors. It makes their lives far worse and undos all your hard work.
Get out of debt so your kids actually have something to use when you’re gone! Thankfully, one of our previous points helps you remove the biggest debt you’ll accrue in life: a mortgage. Downsizing and selling your home will pay off a mortgage and leave you with money left in the bank. In an ideal world, you’ll repay the mortgage before you sell, but it’s not the end of the world if you don’t.
Don’t Forget To Plan Your Estate
Estate planning is the legal process of dictating what happens to your money and assets when you pass away. Once again, you don’t like thinking about this, but it pays to plan things as you’ll be surprised how many issues can arise. Writing a will is a big part of estate planning and is the clearest way of showing everywhere where you want your money to go or to whom it should pass to. This is the best way of ensuring your kids get everything and nothing is lost to the state or government!
Don’t be afraid to think about the future, even if things like retirement seem a long way away. Plan now to secure a more comfortable life for both you and the rest of your family.