Retirement planning for underprepared mid-40s parents

Submitted by SinistreCyborg t3_1001urn in personalfinance

Hey guys, I'd just like to explain my parents' retirement situation here and get your suggestions on what I should do to best help them in this crucial point in time.

My mom is a stay at home mom, and my dad is in his mid-40s and earns a high six-figure base salary, with bonuses and stock options on top of that. His 401k balance is in the $100k-s, his IRA in the mid $50k-s, and that's about all of the retirement savings they have between the both of them. He also has two car loans he's in the process of paying down (a brand new spanking Tesla and a Honda Odyssey) and a 30-year mortgage which started in 2020. I've also personally witnessed the lifestyle inflation in our home since his income started rising, from all the new cars and computers and stuff that he buys.

I really worry that he isn't putting enough in savings to have a modest retirement and that my parents' scenario might pose a financial risk to me as well in the future, as I would have to support them. I am okay with doing it, but I would rather not (especially considering how high his income is right now, and his ability to save more). I advised him to see a financial planner and discuss his retirement plans with them broadly, but what came out of this was that he visited a Fidelity branch one evening and asked really specific questions about picking ETFs and such.

He also does his taxes by walking into an H&R Block branch, where they pretty much just press a couple buttons on their computers like they're trained to do, and I worry that he's not exploiting all the ways to reduce taxes that may be available to him... backdoor roth IRAs, a 529 for my high school age brother, etc.

What I ideally want for him is to have an ongoing relationship with a financial planner who is a fiduciary and/or a CPA, where they could properly go over his retirement planning with him, find all the ways to stash away money for the future, and generally make the most of his current situation (his older age + high income) such that him and my mom could have a solid retirement. In the next few years, I may also need to estrange from them due to personal reasons, and in the event that it happens, I want to rest assured that they will be doing okay financially and not be troubled.

What can I do here? Who should I set him up with, that could go over his retirement stuff with him and work with him on an ongoing basis to help out with this stuff?

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Jmb3930 t1_j2f1o33 wrote

There isn't anything you can do.

Curious what tax savings do you think H&R Block is missing on your patents return? Backdoor Roth and 529 do not effect federal tax returns.

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SinistreCyborg OP t1_j2f4ic5 wrote

Not entirely sure but I felt like there could be more deductions left on the table that they’re not taking advantage of.

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summer-lovers t1_j2f6q8j wrote

It isn't your responsibility to do any of this, or take care of them when they waste all their money. It's great if you try to help and they are receptive, but please don't feel responsible for them.

Ultimately what they do, or don't do, is their choice and theirs alone. Sounds as if your dad may ruin things no matter what anyway. With that kind of income, they should have no concern, so, if they're unwise enough to squander their fortune, they must manage the consequences.

I hope you can get them to speak with someone that can help guide them, tho.

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dequeued t1_j2f0751 wrote

I'd suggest starting with the retirement predicaments wiki page. Go through all of that. You'll need to gather more information and you'll want to do some reading (I'd especially recommend How to Make Your Money Last by Jane Bryant Quinn), even if you convince your parents to hire a financial planner, it will help you pick an advisor and review what they're doing.

I would worry somewhat less about advanced tax planning, using the right tax-advantaged accounts, etc. and more about your parents simply not saving enough money.

As far as a financial planner goes, what you want is a fee-only CFP. Read the financial advisors wiki for more information. If your father is amenable to the idea, I'd suggest interviewing a few candidates (probably over a video call these days) with you on the call.

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