Retirement income planning isn’t like learning basic addition, riding a bike, or learning how to swim. These are all skills that are learned by virtually everyone at a young age, and once internalized, they are not forgotten. You’d be hard pressed to find an adult that couldn’t do those things, but at Kennedy Wealth Management, countless adults come into our office seeking professional financial advice. Learning how to properly save, invest, and build for your future is something that many high-income earners don’t know how to do. With that being said, imagine how hard it is for your children to grasp these concepts, whether they’re in elementary school or nearing graduation.

And yet, money management and retirement planning are two of the most important things you can possibly teach to your children. Not only that, it is strangely and conspicuously absent from most public schools. Investing in your future is not only essential for a future of happiness, it’s an act of self-discipline that will help your children to develop the same kind of diligence in other areas of their life.

It’s time to start teaching your kids about how they can save for the future, and the importance that retirement income planning will have in their life. Don’t know where to start? Consider some of these tips.

Help Them Develop a Sense of Delayed Gratification

The most important and fundamental concept of saving money for any person — adult or child — is delayed gratification. It’s the idea of holding off in the moment to enjoy a greater return of something later. This is at the heart of all saving, and it’s something that many people fail to develop all the way into their old age.

It’s beneficial for children to learn this skill at a young age. For evidence of this, we need not look further than the Stanford Marshmallow Experiment, a famous study that was conducted in the late 60s. Many children were given the choice to choose between one marshmallow now, or two later (fifteen minutes, to be exact). The children made their choices, and the researchers checked back in on them throughout their lives.

As it turns out, most of the children who waited for the two marshmallows generally performed better academically, professionally, and physically in the decades that followed.

Delayed gratification is the core basis of all saving, so begin teaching this when they’re young. It will help them in every way of their life, from finances to health.

Teach Them to Start Early

The real kicker with retirement planning is that you’re missing out on years of what is essentially free cash if you get a late start. Every adult who has gone through the gamut of financial education understands the power of compound interest, and how early investment can yield enormous returns over the span of a few decades. Imagine if your child had a clear understanding of what their money could turn into if they invested during their ripe teenage years!

While teenagers don’t make a whole lot of money, being able to put even $1000 away at a young age can pay off tremendously for them in the long run. That shouldn’t be a hard amount to reach with even a part-time job, and they will be thanking you later.

Incentivize Them to Save

Children and teenagers aren’t in the same place as adults when it comes to their brain development. In fact, studies have shown that the regions that deal with long-term planning aren’t fully developed in many people until adulthood — one of the many reasons why adults tend to have a more profound awareness of the impact their actions will have in the future.

That, combined with other factors, doesn’t make them very good at saving. To make up for their lack of action, a good thing you can do as a parent is incentivize them to save. Children always like to act in their own self-interest, and if they’re getting something out of saving their money, outside of an arbitrary intangible promise of long-term return, they’re more likely to play ball.

Think of ways you can motivate and inspire them to save. The answer will be different for every child, so use your best judgment.

One common tactic is to match whatever they save, essentially doubling whatever they’re willing to generate themselves. You can also incentivize them with rewards when they cross certain thresholds, such as matching a portion of their savings from your own pocket to use as spending money, giving them some kind of gift, or providing some extra special quality time (like going on a trip or visiting a theme park together). You can be creative here, and you won’t regret it when you see your kid responsibly planning for their future.

Teach Them Not to Depend on Anyone Else For Saving

What we mean to say here is that we’re no longer in an age where a comfortable retirement is guaranteed for anything. Yes, there are measures in place such as Social Security which are meant to provide for people in their twilight years, but many things we took for granted in the past few decades are going the way of the dinosaur.

In the past years, the “traditional path” was viable for most people — go to school, get a degree, find a job, maintain a career for 40ish years, and then retire. That path is rapidly evaporating before our eyes, culminating in a world that’s radically different than the one that we grew up in.

Today’s children, more than anyone, need to understand that their future is not certain. Education causes student debt on a titanic scale, degrees are becoming increasingly ubiquitous and less valuable, and many millennials are switching careers every few years. Pensions are becoming a rarity, and at the end of the day, the future is just much more uncertain for today’s children than it used to be.

That’s why your children should understand that, at the end of the day, it’s up to them and them alone to prepare for their financial future. That doesn’t mean they shouldn’t accept help when it comes along. If you, as a parent, want to pitch in to their future, great. If their employer contributes in any way, wonderful. But ultimately, they shouldn’t rely or depend on anyone but themselves for their retirement income planning, because the future is just so uncertain.

Teach them to start saving early, as early as right now, and help them in whatever way you can, but make sure they understand that outside help won’t always be available. It could be one of the most important lessons you ever teach them.

Teach Them to Get Help When They Need It

Finally, one of the most important things they can learn is that they won’t learn everything from you. While you will undoubtedly do the best you can to teach them all the things they need to know, there are always things that slip through the cracks, whether you forget to teach it yourself, or they fail to internalize it.

Teach them to not be afraid and to get the financial help they need if you’re not around to provide it. This includes the willingness to meet with professional financial advisers, such as our team at Kennedy Wealth Management, LLC.

If you need help with retirement income planning, please contact us, and we will help you to prepare for a bright future. We serve Calabasas, Woodland Hills, and other surrounding areas. We have helped more California clients than we can count, and we’d be happy to help you. Call us today!