Mother’s Day arrives this Sunday. You could, of course, give Mom some flowers, and she’d probably appreciate them. But if your mother is a certain age, you might also want to make another type of gift - a gift that can help her enjoy the retirement lifestyle she’s envisioned.
If you don’t think your mother needs this type of gift, consider this: With advances in health care, today’s retirees can easily live two or even three decades in retirement. Furthermore, women still outlive men, on average, by several years. In other words, your mother will likely have to pay for decades of retirement - and during some of those years, she may be solely responsible for making financial decisions.
That’s why you may want to provide as much investment-related help to your mother as you can. And there’s no time like Mother’s Day to get started.
So, what sort of gifts should you think about? Here are a few possibilities:
Help fund Mom’s IRA. If your mother is still working, she can contribute to an IRA - and she should. A traditional IRA offers the potential for tax-deferred earnings, while a Roth IRA has the potential to grow tax free, provided your mother doesn’t take any withdrawals until she is at least 59-1/2 and she’s had her account for at least five years. In 2008, your mother can put in up to $6,000 to an IRA if she’s 50 or older, or $5,000 if she’s under 50. While you can’t actually make a deposit into your mother’s IRA, you can give her some money for that purpose.
Give stocks. Consider giving shares of a company that produces products or services used by your mother. If you’re going to give away some of your own shares, you’ll need to know what you originally paid for the stock, how long you’ve held it and its fair market value at the date of the gift. Your mother will need this information to determine gains or losses if she decides to sell the stock. (You’ll also need to determine if you have to pay gift taxes. You can give up to $12,000 per year, free of gift taxes, to as many people as you want.)
Pay off a debt. If you can afford it, tell your mother you’d like to pay off her credit card balance, a month’s car payment or another type of loan. But don’t stop there - encourage her to invest the money that she’ll be saving due to your generosity. Even if it’s just a relatively small amount, every little bit helps. And who knows? Your gift could encourage your mother to take further steps to reduce debt and invest more.
Make an appointment with a financial advisor. If your mother doesn’t already work with a professional financial advisor, make an appointment for her to see one, preferably one that comes with good referrals. A reputable financial advisor won’t charge anything for an initial consultation, and, over time, he or she can help your mother create investment strategies that are appropriate for her goals, needs, risk tolerance and time horizon.
By following one or more of these gift suggestions, you’ll brighten the holiday for your own mother. And your gift will still have an impact long after Mother’s Day is over.