Lounging on the beach. Traveling. Sitting at home on the porch sipping homemade lemonade in perfect summer weather. These are the images of the American retirement dream. As parents and caregivers, it’s what we want not only for ourselves, but for our kids, too. Failure to teach your kids about retirement saving, however, can mean their retirement is less than ideal.

The Problem

In the United States, the majority of kids have fairly easy access to what they want and need. Parents and caregivers may not have a ton of cash, but they are able to give their children basics such as enough food, as well as nice things such as iPods and the like. This creates a perception that ready money is always available, making it difficult for children to grasp how important retirement saving truly is.

When to Teach

Retirement is all about saving, although how your child secures and maintains retirement funds (e.g., stocks, bonds, work, pension, etc.) has variables. Understanding this, wait to talk about retirement until you’ve covered some basic savings hurdles with your child, such as managing a simple, small allowance or starting a savings account at a bank.

What to Teach

Basic Savings Amount

Children sometimes don’t see retirement saving as important because they do not perceive the magnitude of the amount of money they’ll need during the retirement years. To help them with this, it’s a good idea to show your kids what they can expect to spend covering basic costs. Have them make a list of expenses you know they’ll encounter, such as electricity and food charges. Calculate how much it will cost to live for one year. Then have them multiply their answer by a minimum of 13.5—this is the difference between the current 2012 retirement age (65) and the average U.S. life expectancy (78.5 years), or the minimum number of retirement years a typical American can expect.

Of course, this answer is just a starting point. Once your children have a grasp of how much it will take to live each year, you’ll have to explain that many people live much beyond 13.5 years of retirement. You’ll also need to explain the concept of inflation. You don’t need to go through complex calculations here. Just make sure your kids understand that costs rise over time and that they’ll therefore need more than the base figure they’ve calculated to survive.

Work Availability

Children also have trouble seeing the urgency of retirement saving because they see work (like money) as always available. Show your child some simple articles about companies that failed or unemployment rates to show that jobs aren’t guaranteed. Better yet, take your child to the unemployment office and have him talk to an expert there.

Even when people could get work, they aren’t always physically able to do so, and this is another key to explain because kids typically feel fit as fiddles. Have your child talk to grandparents, seniors, those in nursing homes and even doctors so he better understands how physical status can prevent employment and subsequent retirement income.

Retirement Savings Options

When your child is comfortable with basic saving, you can pitch retirement as one giant savings goal, but you’ll still need to include retirement savings options as part of your child’s financial education. The younger your child is, the more important it is to start with simple savings options. For example, even putting money in a piggy bank works, as long as your child understands that that money is solely for retirement. As your child matures, move on to more advanced options such as 401(k) plans, the stock market or real estate.