It’s always “what do you want to be when you grow up” and never “what do you want to do when you’ve stopped working”. As a child, the last thing you’d ever think about is retirement – how can you fathom the end of your working life when it has yet to be begin?
The life skills you learn as a youngster are priceless when it comes to approaching adulthood. Although important, financial management and being prepared for retirement might not be at the top of the list of priorities to teach your child. Learning to cross the road is drastically more important than making sure you can live comfortably at 60, but nevertheless, it’s a valuable lesson that should be considered. Lucky for you, we have some tips that could help you out with that all-important lesson of encouraging the kids to think about their retirement.
Squashing the stereotypes
The stereotype of retirement for children has remained the same throughout the years. Typically, a child would associate retirement with an elderly man or woman walking with a cane and potentially living in a nursing home – arguably an uninspiring association for many younger people. However, the more aspirational elements of retirement are often overlooked, such as the wave of freedom that comes with retirement.
A great way to describe it to the kids is a permanent school holiday – no more early mornings or long days and the freedom to spend your time as you wish! They finally have time to pursue the hobbies and interests they’ve always wanted to. And, of course, it’s important to tell children that, in order to enjoy the lifestyle they want, they need to make sure they’ve saved enough money for their pensions.
The key, of course, will be ensuring your children understand what this savings mechanism actually is…
Introducing pensions
The pensions sphere can be tricky for adults to understand, so don’t worry; we’re not asking you to delve into the pros and cons of annuities with your little ones. There are, however, simple ways to demonstrate the basics of pensions to your child, starting with their pocket money.
Pocket money is a wonderful way of instilling financial management skills in kids, whether it be giving them limited allowances for planned spending (such as a planned shopping trip) to understand budgeting or letting them have full reign to create their own budgets and allowing them to learn from their mistakes when all has been spent.
To introduce how pensions work, consider explaining to your child that a small portion of their next batch of pocket money will be added to the batch after that. Although this may be frustrating for the kids at first, it will ultimately teach them that even though they can’t spend the money there and then, they will be better off in the future when they eventually receive the next amount.
Do it now for later
We’ve all heard or said the age-old line, “I’ll do it in a bit”. When you’re younger, it’s easy to say you’ll tidy your room or wash the dishes later, but this mindset should be heavily discouraged when it comes to your pensions. Leaving the workforce removes the safety net of a monthly wage, meaning that retirees must rely on the contributions made in the past. Although it’s important to not put pressure on your child to consider their life after work, it should be said that when you start working and the sooner your pensions are put in place, the better.
Help is on hand
When explaining anything financial to the kids, it’s always worth mentioning that there are resources that can help them navigate their money woes in adulthood. Financial advice or guidance can offer help in tackling debt, applying for a first mortgage, and more fittingly, managing pensions.
After all, retirement is an important part of your life that celebrates your years of hard work. In the years that they should be kicking back and enjoying life to the max, we’d hate for your kids to be still working because of not having the information or knowing they have the necessary support to kickstart their pension.
At My Pension Expert, we’re committed to making sure everyone has access to the information that will make their pension work for them. We believe that financial advice is the best form of financial education and encourage people to seek it where they can, to make sure they receive a full list of options suitable for their circumstances and goals.