There comes a time when parents nearing retirement should have a conversation with their adult children about their financial situation. In many cases the conversation can feel overwhelming and a bit uncomfortable. Also, 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. Consider these four tips to get the conversation started:
1. Communicate your own financial plans. Itís important to make your children aware of your short- and long-term plans, especially if youíre nearing retirement or have recently retired. Share any major financial and lifestyle decisions, including if youíre planning to travel or relocate during retirement, what arrangements youíve made for future health care needs and any legacy plans you have in place. If youíre 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. Itís crucial to be upfront if you anticipate needing financial help from your children in the future. If youíve 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 youíve 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 childís financial situation and may even leave you with unanticipated responsibility. Ask your children if they have life and disability insurance, and if theyíve established a guardianship plan for their children in case of a tragic event. Also share with them the plans youíve 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 anotherís values. Whether you and your children usually agree about politics, religion or financial habits, itís important to respect each otherís plans and wishes. 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. And your kids may not be up for the discussion because they donít want to think about their parents getting older. While these conversations can cause tension and lead to tough decisions, itís 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 professionalís objective viewpoint can be especially valuable for financial conversations between generations of family members.
Larry Olivarez, Jr. CEPģ, CRPCģ, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Corpus Christi, Alice, and surrounding areas of South Texas. He specializes in fee-based financial planning and asset management strategies and has been in practice for 13 years. To contact him please call 361.654.1900 in the Corpus Christi office located at 711 N Caranchua Suite #1701 or 361.668.1212 in the Alice office located at 604 E. Second St.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
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