When It Comes to Family Money Matters, Talk It Out

Baby Boomers: When It Comes to Family Money Matters, Talk It Out

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A recently released research study revealed that the majority of men and women of the baby boomer generation are providing financial support to their family members – 93% say they are helping their adult children and 58% admit to helping aging parents*. These statistics may not surprise you, especially if you fit into this group. But, when it comes to how baby boomers approach this support, males and females differ; women are much more likely to have the money conversation with their children or parents. And, while men generally stay quiet on the topic, more often than not, they are the ones who reach for their wallets before (or instead of) discussing money matters.

So, if coming to an agreement about what kind of support to provide your aging parents or adult children is the easy part for you and your spouse, where is the problem? Unfortunately, when one person tends to default to a specific action, whether that action is having a conversation or writing a check, misunderstandings can erupt.

Offering financial help to family members may take care of a short-term issue, but avoiding conversations or failing to set expectations can leave room for confusion. As baby boomers approach retirement, they are likely sitting on a nest egg created for the sole purpose of funding their retirement years. Making sure both spouses agree to the kind of financial support they are lending – and to what extent – is crucial, especially if their financial support will have a potential impact on their retirement savings.

Talking about money issues is difficult – and often, so are family dynamics. Put the two together and financial conversations can quickly derail due to heightened emotions and steadfast opinions. Since women tend to engage in more money talks with their parents and children, they should make sure to speak with their spouse and get his perspective before any other conversations occur – and likewise, men should open up before pulling out their wallets. Partners may even want to consider documenting their decisions, reasoning, and guidelines for any kind of financial support they provide a family member. As time goes by, it can be easy to forget who said what and upon which terms the family agreed. A written plan or agreement serves as a handy reminder.

Of course, these guidelines are not limited to couples. The same study reveals that boomers' daughters are supporting their parents more significantly than they were just five years ago. When financial times are difficult, all this money talk can create tension; approximately half (49%) of boomers' adult children say that conversations with their parents at least occasionally cause tension. When money and words exchange, it is crucial that both parties understand each other's perspective and have a chance to voice their ideas.

It is important to discuss financial circumstances with parents or children well before an issue comes up, but that promptness can often be harder to do than it appears. Carefully choose when and where to have these discussions. When possible, avoid talking about money during emotionally demanding events like holiday celebrations. While a family member might have good intentions when they share their opinion, these events are simply too emotionally charged to result in good decision-making. Instead, hold money conversations privately during a time you and your family member have set aside specifically for that purpose.

If financial conversations and decisions are difficult for your family, consider seeking objective advice from a financial professional. Third party advice can help you stick to the numbers, and make a solid plan that all family members can agree to and appreciate.

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* 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.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.

This communication is published in the United States for Texas only; and this advisor is licensed only in the states of CA, CO, FL, MO, NC, NM, OK, TX, and VA.

M. Ahmad Adnan, CFP®, CRPC®, RFC®

Financial Advisor

Business Financial Advisor

Ameriprise Financial Services, Inc.

3200 Steck Avenue | Suite 250 | Austin, TX 78757

Phone: 512.213.6400 Ext. 102 | Toll Free: 866.238.4230

Email: masroor.a.adnan@ampf.com

ameripriseadvisors.com/masroor.a.adnan

© 2012 Ameriprise Financial, Inc. All rights reserved.

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