Baby Boomers: Four tips for financial conversations with your adult children
When it comes to money as a topic of conversation among family members, the news is mixed at best. According to recent research, 50 percent of boomers say they are talking about finances regularly – an increase in the last five years – but 37 percent admit they haven’t adequately discussed their current financial situation with their adult children.1 Busy schedules and limited time may make financial conversations easy to put off, but sharing information can help you feel more confident and prepared in the long run. Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial suggests four things to keep in mind during these discussions.
1. Communicate your own financial plans. It’s important to make your children aware of your short- and long-term plans, especially if you’re nearing retirement or have recently retired. Share any major financial and lifestyle decisions, including if you’re planning to travel or relocate during retirement, what arrangements you’ve made for future health care needs and any legacy plans you have in place. If you’re currently providing financial support to your adult children or grandchildren (or plan to in the future), speak honestly and set realistic expectations. Be clear about your ability to contribute funds for their specific financial goals (such as educational expenses) or to provide support if your child has a financial emergency like an unexpected job loss.
2. Let them know what they can expect in the future. It’s crucial to be upfront if you anticipate needing financial help from your children in the future. If you’ve identified a shortfall or may need financial assistance if certain circumstances arise (such as a long-term care situation), make your children aware of this immediately. Discuss their ability and willingness to help and if needed, explore other options together. If you feel good about your financial situation, offer your children any financial truths you’ve learned along the way that may help them as they plan and save for their own financial goals.
3. Plan for the unexpected. An unexpected disability or death has the potential to greatly affect your child’s financial situation and may even leave you with unanticipated responsibility. Ask your children if they have life and disability insurance, and if they’ve established a guardianship plan for their children in case of a tragic event. Also share with them the plans you’ve made. Provide information on where important documents such as wills, a written power of attorney, financial statements and contact information for your financial professional, lawyer and accountant can be found.
4. Listen and understand one another’s values. Whether you and your children usually agree about politics, religion or financial habits, it’s important to respect your child’s wishes and allow them to follow their own path. Come to a mutual understanding about when financial conversations are appropriate and what types of financial decisions should be communicated between both parties.
Many families find it difficult to have financial discussions. But while these conversations can cause tension and lead to tough decisions, it’s easier to have them before an unexpected event occurs or hasty trade-offs have to be made. Consider inviting your children to join you for a meeting with your financial advisor if you have one. A professional’s objective viewpoint can be especially valuable for financial conversations between generations of family members.
1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.
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