It is normal, when working with your financial professional, to focus on the needs of your immediate family. For example, if you are a Baby Boomer, you’re probably focused on retirement planning, when to take Social Security, and how to invest your retirement assets. Other financial planning issues such as college and home buying are behind you, while long-term care and estate planning will soon become a focus.
But, there are some very good reasons why your financial planning activities and discussions should span the generations.
In most families, the needs and interests of family members overlap. Grandparents are interested in their grandchildren’s college plans, and grandchildren may someday be involved in the care of their elders.
Healthy families talk about these things. When families love and care about each other, there’s a certain interdependence that acknowledges the needs of each generation and the ability of the other generations to help. Even if the generations keep their money separate, there are often conversations where family members share ideas and opinions about each other’s lives and financial decisions. They get into each other’s business, so to speak, because one generation’s decisions often impact the lives of the others’.
Framework for Facilitating Generational Planning Discussions
Once a year, when you meet with your financial professional, bring up issues related to your family on these nine topics. For each, your financial advisor will be able to provide insight and resources.
Your Family
Start with a general conversation about your family.
- Do you expect any changes in relationship status, such as marriage, cohabitation, or divorce?
- Do you expect any changes in family composition, such as a birth or adoption?
- Has an adult child moved back home?
- How are your parents doing?
Talking freely about your family may uncover financial planning needs that you had not thought about.
Your Goals
In addition to your own financial goals, think about your family members and what they hope to achieve.
- College?
- A home?
- Start a business?
- Remodel the house?
- A special vacation?
Even if you and your family members keep your money separate, you probably talk about these topics together. Your financial advisor may be able to help family members work to achieve their goals, too.
Related: A List of Financial Goals to Set and Achieve
Your Business
If you own a business and hope to keep it in the family, start talking to your financial professional early about your succession plans. Ask your advisor what you and your family need to think about in preparation for the eventual transfer of control and ownership of the business.
Related: Do You Know What Your Business is Worth?
Your Work
If you’re still working, you’ve probably given a lot of thought to when you might stop. When doing generational planning, you might also want to consider the stop-work decision in the context of your family. If money is tight anywhere in the family, continued work on your part may be considered a resource to the family. Also, talk about the work and career goals of your younger family members.
Your Health
Does anyone in the family have health issues that could create a financial burden? Talk to your financial advisor about your insurance options, including:
- Medicare
- Employer insurance
- Individual insurance
- Medicaid planning (for long-term care)
There are so many health insurance options today, it’s hard to analyze them all.
Your Money
All of these life goals and issues have a financial component, but here you’ll be talking directly about your money: Investments, taxes, cash flow, debt, etc. We recommend that both spouses participate equally in the discussion. The last thing you want is for one spouse to become widowed and have no idea how to carry on. And what about your children, grandchildren, and parents? Do they have any issues that your financial advisor can help with?
Related: How to Navigate Your Finances As a Couple
Your Estate
Generational planning is estate planning with a focus on the whole family, as opposed to the one-way transfer of the wealth holder’s assets. Once you’ve gotten your affairs in order (or have a plan for doing so), talk to your financial professional about the rest of your family and what might be expected to happen after you pass.
- Will the surviving spouse be prepared to do it all along?
- Will beneficiaries be prepared to handle their inheritance?
- Is there anything you can do now to make your passing easier on your children?
By extending your thinking beyond the grave, you can create a true legacy that will live on through the generations.
Your Retirement
You touched on this in the work discussion, but here, you’ll be zeroing in on retirement plans.
- Are there any retirement accounts held by former employers?
- If you own a business, can you benefit taxwise by establishing a new retirement plan, or contributing more to the plans you do have?
- Do any family members need help understanding required minimum distributions as they relate to their own or an inherited IRA?
- Does anyone in the family need a second opinion on how retirement assets are invested?
Related: How to Develop a Realizable Vision for Retirement
Your Future
Anything that hasn’t been covered under the previous topics may be addressed here. Again, expand it to include family members.
- Does anyone need help getting financially organized?
- Could everyone get by for six months without dipping into retirement or other long-term accounts?
- Does anyone anticipate any significant life changes in the next five years?
Generational planning is a relatively new concept in financial planning. It recognizes that the financial and life decisions made by one generation often have an impact on the others’. So while you are doing your own financial planning, give some thought to the rest of your family and how you and your financial professional may be able to help them achieve their financial goals.
As you navigate this process, remember that Bautis Financial is here to support you every step of the way. Together, we can create a comprehensive financial strategy that spans generations, ensuring a legacy of financial stability and prosperity for you and your loved ones. We invite you to schedule a complimentary consultation with our team of financial advisors using the link below.
Elaine Floyd, CFP, is Director of Recruitment and Life Planning for Horsesmouth, LLC.