Charlotte has started her retirement life, just not how she expected. After a successful career in consumer products, she finds her early post-career life is filled with time having to take care of her mother, who is in a nursing home.
Emma was working, and the plan was for her and her husband to retire in 2025. However, two years ago she had to put her career on hold and become the full-time caregiver for her mom, who moved in with them. She struggles with the emotions of not having a professional life, while feeling blessed she is able to have her mother there. Now, when it is possible, Emma feels like she wants to go back to work for a bit, “to finish some unfinished business” before starting her own retirement.
Bill and Ann knew they were financially ready and were getting emotionally prepared to retire. Then their son lost his job and ran into financial difficulties. Presently, their son, his wife and the younger couple’s three kids are living with them until they can get back on their feet.
As the life expectancy of the population expands, more and more people are joining their parents in retirement. On the other hand, a higher number of retirees are also figuring out how to financially help their kids. The dynamics of the intergenerational impact to a retirement lifestyle strategy will only continue to increase. As a financial professional, you need to be prepared to understand the changing aspects and assist your clients in preparing for possible disruptions to their financial and lifestyle plans.
The sandwich factor
The Pew Research Center conducted an analysis in 2021 that looked at family circumstances and highlighted the term “sandwich generation.” The researchers found that among people in their 50s and 60s, anywhere from 6 to 8 in 10 are “sandwiched between an aging parent and an adult child they’ve helped financially.”
Depending on the origin of the information, somewhere between 30% to 35% of households in the United States have an elderly parent living with their adult child. There are a variety of factors, but finances usually play a significant part. In this case, the child is taking care of the parent.
In addition, the Pew Research Center highlighted that back in 2014, for the first time in 130 years, millennials were more likely to be living with their parents than on their own or with a spouse. So, this trend started years before the pandemic sent many young adults home to mom and dad.
Since many of the circumstances for clients might be embarrassing or uncomfortable to reveal, financial professionals may not even be aware of generational factors in retirement planning.
It looks like the intertwined condition of older children and older parents is here to stay. Since many of the circumstances for clients might be embarrassing or uncomfortable to reveal, financial professionals may not even be aware of generational factors in retirement planning.
Never fail to ask the obvious
I speak with wealth managers who tell me about the great long-term financial relationships they have with many of their clients. But when you dig into lifestyle questions, I often learn that the connection is only at the surface, even if they’ve had multiple personal conversations with their clients. Going deeper on “the sandwich factor” can be done quickly without sounding obtrusive. Here are some conversation starters:
- Do you have a detailed budget? While that sounds like a direct question, only 48% of the participants in my Retirement Time Analysis have created formal budget plan. If your clients haven’t put a formal budget in place, impress upon them the benefits of understanding how far their money can go and what they can do if their plan gets disrupted.
- Tell me more about your kids. As clients share with you the details, look for signs that might impact the financial strategy. Perhaps they’re supporting kids who’ve failed to launch or boomeranged back home, or maybe they’re funding a child’s business venture or helping pay off student debt. Fact-finding questions can uncover hidden risks.
- Tell me about your parent(s). You might be surprised how many people really have not considered they might need to invest a significant amount of time and resources to parent-care. My mom did a great job of masking health issues from her children, until they became significant. My brother, sister and I were able to come alongside and help, but it would have been much easier to know earlier.
- Tell me about your siblings. While the sandwich factor typically plays out a generation before or after, there can be instances when your clients will need to walk alongside a sibling, providing financial support.
The “tell me abouts” create ways for you to get to know your clients better. If all you get is a window into their personal life, then at the minimum you will deepen your relationship and grow their trust. The more they trust you, the better you can work their family dynamics into the financial strategy, creating a more solid plan for everyone.
Living In honor
Charlotte, Emma, Bill and Ann are working through unique circumstances that are disrupting the normal flow of life and the plans they set for themselves. Nonetheless, in each case they want to do the right thing. They want to honor their parents or children. However, that decision led from the heart, may not fit within a structure tied to finances.
As a financial professional, you can help them fulfill that honor and provide an impact not just for them but for their extended family as well.
Dave Buck is the author of the upcoming book “The Time-Optimized Life”, owner of Kairos Management Solutions, LLC, and founder of the Infinity Lifestyle Design program. As a certified retirement planning coach (CRPC), Dave works with financial services providers helping their clients create a post-career lifestyle strategy. To learn more, contact him at firstname.lastname@example.org or visit Infinity Lifestyle Design.