Retirement: It's a family affair

The consequences of your retirement planning decisions often ripple out beyond just yourself and your spouse or partner, and these consequences can significantly impact your extended family and close friends in both positive and negative ways.

A report issued by Merrill Lynch, in collaboration with Age Wave, titled Family and Retirement: The Elephant in the Room, looked at this and other issues tied to retirement. The report found that while retirement planning should be a family affair, often it is not. Many people don't discuss their retirement plans with family members, an omission that can have unfortunate results.

Here are some of the report's key findings.

  • As people age, "being a burden on family" and "running out of money" become their top concerns.
  • 62 percent of Americans age 50 and older have provided financial support to family members during the past five years; most have not factored this support into their retirement plans.
  • 56 percent of people age 50 and older would prefer to begin passing on their assets while they're living rather than at the end of life.
  • 37 percent of people age 50 and older believe they'll need long-term care. The truth is, most likely twice that number will eventually need this care.

Here are some thoughts and observations on how you can apply the findings of the Merrill Lynch/Age Wave report to your circumstances, so that your retirement will have a positive impact on family members instead of being a burden. These suggestions are based on my professional expertise and on my personal experience in dealing with aging family members.

  • Have a plan for addressing the threat of long-term care expenses. Many boomers -- including my wife and me -- now find we have to address this issue where our parents are concerned. "I'll deal with this later" might be a common reaction, but it's not a good strategy. One way to minimize the potential burden you may place on your children is to get serious about taking care of your health, in order to reduce the odds of eventually needing care. Also, take steps now to be able to pay for long-term care in case you need it. Such steps could include buying long-term care insurance, holding your home equity in reserve and not tapping it with a reverse mortgage or home equity loan, and setting aside a dedicated investment account that won't be tapped for ordinary living expenses. If you take these steps and wind up not needing long-term care, then the home equity and/or dedicated investment account can fund a legacy when you pass away.
  • Realize that you can leave a meaningful legacy to family and friends that goes well beyond money. The gift of your time and life experience is often more valuable than money, particularly at key transition or crisis points in the lives of your loved ones.
  • Give away some of your treasures and memorabilia while you're alive, so you can see how they're enjoyed. Often adult children and grandchildren value the family heirlooms as much or more than financial gifts. This suggestion might be particularly appropriate if you decide to downsize your home to reduce your living expenses.

The full Merrill Lynch/Age Wave report contains a wealth of information and ideas, including insights on providing the appropriate ground rules and boundaries in providing support to family members, the unique challenges of blended families and divorce, ideas for connecting with grandchildren, and the payoff to having proactive planning and discussion sessions with family members. It's important to note that those who've had financial discussions with their spouses or adult children are almost twice as likely to say they'd be well prepared if they were to face family challenges.

If you're age 50 or older and haven't started seriously planning for your retirement years or discussing these issues with your spouse, partner, and extended family, what are you waiting for?


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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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