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How to make sure your adult children can retire well

How can you make sure your adult children are ready for retirement?

Many studies have found that younger generations have positive financial habits already, even though many are facing financial challenges that are exacerbated by overwhelming student loan debt. In a T. Rowe Price survey of over 1,500 millennials with a 401(k), more than three-quarters said they track expenses carefully and two-thirds stick to a budget. Saving for retirement is actually their top priority, tied with paying down debt.

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"It's encouraging to learn that millennials are so receptive to saving for retirement and are generally practicing good financial habits," said Anne Coveney, senior manager of Retirement Thought Leadership at T. Rowe Price. So the good news is your child may already be well on the way to securing his or her own financial future, but you still may need to guide them and share with them some helpful tips.

1. Encourage them to take full advantage of the employee benefits packages at work — that can help them understand how prudent decisions today will benefit them later.

2. Urge them to increase their savings to their 401(k) or workplace plan every year — at least enough to get the company's matching contribution. Continue to increase those contributions by 1 or 2 percent each year until they are contributing 15 percent of their salary to a retirement plan.

3. Remind them to save money outside of their 401(k) at work as well. Suggest they contribute to a Roth IRA in addition to their workplace plan or instead of one, if their employer does not offer a retirement plan. A Roth IRA allows their after-tax contributions to grow over time, and earnings and contributions can be withdrawn tax-free in retirement. (In fact, if they are in a pinch, they can withdraw their Roth IRA contributions at any time without penalty.)

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4. Finally, make sure they understand they should have enough savings to cover at least three to six months of living expenses. Remind them to use their cash cushion — not their retirement savings — to pay for unexpected expenses. This final piece of advice will help ensure they don't undo all of the positive savings goals they have already achieved.