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Family Financial Conversations Across Generations

Family Financial Conversations Across Generations

April 04, 2024

Now that you’re approaching retirement, your kids are most likely grown, with financial plans and pressures of their own. You may be reluctant to burden them with more information and decisions. But, now is the time to talk with them about your financial values and goals for retirement, including how they might possibly inherit some of your wealth and the implications around this. Feeling a bit of anxiety around these topics and conversations is completely normal. Here are some tips to help you get started.

Start the Discussion Now

For many people, financial conversations with family can be tricky. Your family members might feel unclear about your financial situation as you move towards retirement because you haven't shared the details with them. You, on the other hand, may feel you don't have the information or expertise to properly explain all the financial and legal aspects. And, you may feel uncertain about specific decisions you’ve yet to make.

Many people either delay this conversation about finances or never discuss it at all. Although understandable, this is not a useful strategy. While avoidance may save you stress in the moment, it can create a build-up of problems in the mid- to long-term. Forming a strategy for financial conversations across family generations can set expectations and alleviate uncertainty for everyone involved. 

It’s important to understand that you don't need to know everything. You also don't have to address and resolve every issue all at once. Consider this the beginning of many conversations, involving different people at different times.

Talk with Everyone Involved—Inside and Outside of the Family

Your strategy may include legal, financial or even medical considerations, so it is also important to take these discussions to professionals who can offer their expertise and advice for your specific situation. Bringing your family into some of these conversations with your team of professionals - financial advisors, tax consultants and estate planners - can facilitate open communication and better understanding.

When you invite family members into conversations you might notice several additional benefits, such as:

  • Your family will know who to call if something unexpected happens.
  • It can remove some of the strain from you to have a trusted, outside voice explain your plans and strategies and to provide knowledgeable guidance.
  • Your adult children and/or beneficiaries can have an opportunity to ask questions they might have and receive knowledgeable responses.
  • Through open, mediated communication, you may uncover issues and solutions that you haven't thought about before.

What Do You Want to Share about Your Financial Goals and Values?

Many families do not discuss the larger, inter-generational aspects of their financial situations. They often try to feel their way through the financial maze and end up making risky or incorrect assumptions. For example, you or members of your family may have varying degrees of understanding—or misunderstandings—about retirement plans, estates, inheritance, property, taxes, savings, investments, insurance and long-term care, all of which were likely formed without an open, intentional discussion. Sometimes, our situations change with time and the initial plans we've put into place need to be amended. 

The attitude that it's your business, not theirs, generally isn't helpful—or even entirely true. Your decisions now and throughout retirement may have all sorts of financial implications for the subsequent generations in your family, from how you choose to spend and pass on your wealth, to the plans you make for long-term and end-of-life care.

Assuring your family that you have a retirement plan and plans for the future—and inviting them into these conversations—is a great way to demonstrate your values and show leadership, as it provides structure and confidence for a future they’ll one day face without you. Equally important are the conversations you may need to have with your own parents to understand their needs and wishes and to understand how their decisions may impact you in the future.

As you think through the conversations you want to have, it may be helpful to consider three phases most people experience in retirement. There are the Go-Go Years, which include the first years of retirement (at whatever age) up to around 70 years old. Then, there are the Slower-Go Years, from around 70 to 80. Finally, there are the No-Go Years, when you reach 80-90 years and older. Each of these phases is likely to involve different sets of financial issues.

  • Those in their Go-Go Years may want the freedom to spend more generously at this stage, since they are free from work burdens but have plenty of free time—and the energy to enjoy it. Traveling, dining out, doting on grandchildren and attending social events all require money. Nonetheless, they might still face a few financial pressures, such as paying off a mortgage or managing healthcare costs. Managing your assets for the long-term is critical. 
  • The Slower-Go Years are often marked by a change in the pace of life. Travel and leisurely activities may be limited or less frequent, and retirees may experience increases in healthcare needs. Adjustments to living arrangements, accessibility accommodations and/or supportive services may be needed or nearing. Despite a slower pace, financial demands can remain significant, which means careful planning and resource management are of the utmost importance.
  • Retirees in the No-Go Years may need to spend more time and money on themselves, especially if and when their health and independence start to decline. Adjustments to living arrangements and/or supportive services will likely be a necessity. Planning ahead financially for healthcare expenses, living expenses, and end-of-life care, as well as up-to-date estate planning, are essential.

Talking through these different stages can offer everyone involved more clarity and confidence for the future.

Schedule a meeting, and let’s discuss how to begin having these important financial discussions across the generations in your family.

The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. 

For a comprehensive review of your personal situation, also consult with a tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice.