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Money and Your Goals

Have You Included Your Family in Your Retirement Plan?

Couple discussing retirement plan

How to Talk to Your Family About Your Retirement Plan

Do your kids know how you plan to spend retirement? Just as your career impacted your loved ones, your retirement plans will too – but you won't know the extent of that influence until you talk about it together. Your kids may not understand why you're planning to sell the family home, or how their plan to start a family across the country influences your finances. It may also be a surprise to them if you decide to switch to a part-time job once you retire.

The Value of a Transparent Conversation with Your Family

Talking about retirement with your family requires you to switch gears in your family dynamics. It's a time to consider who supports whom, and how financial clarity can contribute to healthier dynamics as you begin this new chapter in your family. Including your family in the retirement conversation can lead to beneficial consensus:

  • You Can Prepare Them for Change. Preparing for your retirement also involves preparing your family for your retirement – so it's better to start early. For example, you may not be able to support your children with housing or education. The earlier you can engage in these conversations, the more time your family has to arrange for their own personal changes.
  • You Can Provide Beneficiaries with an Early Advantage. Do your children and grandchildren know what they can expect in terms of inheritance? Give your family the information they need to address their own finances, like advanced tax planning. Even if you don't have a concrete number, beneficiaries can plan for inheritance taxes ahead of time with a close proximation. And when your family has what they need to regularly update their own financial plan, you can feel more confident in your own.
  • You Can Avoid Surprises. It's also important to regularly talk to your family about your retirement plans and goals and update them if your plans change. Share your finances with them and be transparent about your dreams as well as your worries (even if it feels uncomfortable). If your children were struggling financially, you would want to know so you could help. As dynamics change, consider that your children will want to know if you're struggling.
  • You Can Plan Your Futures Together. As you create your retirement plan, involve your family in the planning process so they aren't caught off guard. Invite them to appointments with your financial advisor, and discuss multigenerational investment and insurance options, as well as beneficiary distribution requirements from retirement accounts.  

Conversation Starters to Initiate the Dialogue with Your Family

Talking about retirement with your family is an ongoing process. Not sure where to begin? Here are some great questions to kick off a deeper dialogue when the time is right:

  1. Where will you live? Are you planning to sell the family home to fund assisted living? Will you be staying in town or moving to a more affordable city? Do you have a family member who wants you to live with them when you are no longer able to live independently? Whatever your plans, give your family members the space to express their opinions and clarify how they will be impacted by your decision.
  2. What are your children's roles and responsibilities? As you reach retirement age, your family needs to know their roles and responsibilities. Are your children planning to take over your business? Do you know who will be executor of your estate? Will your children help to fund assisted living costs? Who will manage your assets if an unforeseen health issue impacts your ability to manage your own responsibilities? Engage in thorough conversations about your children's roles, so when surprises happen, everyone knows how they are meant to contribute.
  3. How is your children's financial security? According to a recent Pew Research Study, 6 in 10 parents with children ages 18 to 29 (59%) admit to giving them "at least some financial help in the past year."  Your children's financial health and security is interwoven into your own – so it's important to clarify where they stand and to create realistic expectations based on their own needs and goals. Do your children have a savings plan now? What are the parameters around providing financial support for your children? Have you discussed whether they will live at home or independently through college? How about after college – do they plan to join the workforce or continue their education? And what does this mean in terms of your financial plan?
  4. Have you provided for long-term health care? Your health care plan plays a big role in your financial security, and it could impact your children's security if the plan has limited coverage. Assuring your family that you've made appropriate health care coverage plans can help them feel more confident about their own finances in the future.
  5. How does giving and philanthropy fit into your retirement plan? What are your family's opinions about charities you may include in your estate? How will you budget for regular giving in retirement? If this is important to you, then it's also important for your family to understand so they can help you maintain your charitable contributions for years to come.

How a Financial Advisor Can Help

Financial conversations with family can be emotional and even uncomfortable. If you need support starting candid conversations, hold these conversations in the presence of an objective and informed third party, like a financial advisor. Your financial advisor can also help you begin a launch plan for your children, clarify roles and responsibilities, and keep conversations on track as you refine your retirement plan.