Financial Focus: Retirees – Discussing Finance with Grown Up Children
Published at 9:34 am on Wednesday, July 12, 2023
Like any retiree, you will likely have financial worries after you retire. However, if you invest regularly and follow a long-term financial strategy, you should be able to handle most issues you face. But there is one important behavior that retirees often overlook. It’s about sharing your financial situation with your grown children. And this knowledge can benefit the whole family.
You may be surprised that children worry about your financial well-being. Consider Age Wave and his 2023 findings by Edward Jones.
• 66% of millennials (generally defined as ages 27-42) worry that their parents or in-laws won’t have enough money to live comfortably in old age.
• 83% of millennials want to know their parents will be financially secure in retirement, even if they give them less money.
If you have children in this age group or older, or are expecting children soon, how can you address their concerns and potentially improve your financial prospects? Communication is key. Being open with your family about your financial situation can reduce anxiety and misunderstandings. If you are financially well, your adult children may be reassured that you do not need assistance. Also, if you are feeling financial pressure, you can let your children know the steps you are taking to improve the situation.
One such step might be cutting your cost of living. The less you spend on a daily basis, the better your ability to maintain your investment and retirement accounts. While you may be able to cut costs in many small ways, such as terminating a streaming service you no longer use, shrinking your living environment can have an even bigger impact. In fact, a study by Age Wave and Edward Jones found that 72% of today’s retirees have downsized or are willing to downsize to reduce housing costs. Downsizing isn’t for everyone, but if you can, it can be a big savings, so it might be worth considering.
You may be able to reduce or consolidate your debt. Start by figuring out how much debt you have and what types of debt you have. Then consider ways to reduce payments, such as refinancing. For example, if you have balances on multiple credit cards, you may be able to transfer the amount you owe to one of his cards with a better interest rate.
Another thing to consider is adjusting your investment mix to increase your retirement income. While he may have invested mostly for growth during his working life, after all, he could last 20 years or more in retirement, so he needs to leverage as much of his financial assets as possible. However, after retirement, you may need to shift your investment focus somewhat towards income-generating opportunities. Keep in mind, however, that you still need some growth potential to stay ahead of inflation.
A final suggestion: Let your children know if you’ve already developed strategies for dealing with potentially expensive long-term care costs, such as staying in a nursing home. This is a burden that we certainly do not want our children to bear.
Letting your kids know about your financial situation and how you’re trying to improve it can put everyone at ease. So keep the lines of communication open.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, SIPC Member