If you’re a Baby Boomer or older Gen Xer with adult children, it’s likely that your kids’ finances are tighter today than they will be for much of the rest of their lives. Typically, income matches expenses, and finances may even cross into the red when you have young children and are paying daycare expenses. As your career progresses and your kids get older, you should have more opportunities to save. The gap between income and expenses is often biggest between when your kids finish college and when you retire. I can see you on the other side of the screen nodding your head in agreement.
That window between your kids fleeing the nest and your retirement is when you should see the biggest growth in your balance sheet and, more specifically, your retirement accounts. However, the retirees with the most flexibility also use taxable or non-retirement accounts. These accounts carry an array of labels: joint account, individual account, taxable account, brokerage account, living trust account, etc. But they all mean the same thing from a tax perspective: You are paying capital gains taxes as you transact rather than paying income taxes when you withdraw.
