Financial

Finances aren’t just personal anymore – they are generational

For those coming from the baby boom generation, discussions about money were taught to be private. Outside of providing details to a financial advisor, accountant or tax preparer, boomers generally felt they should not share it with any one else, including parents and children. Today’s changing financial landscape may require a different approach when it comes to money. This is particularly true for those “sandwiched” between financially supporting elderly parents and adult children.
A generational opportunity
Boomers belong to what historically may be the most prosperous generation in history. At the same time, boomers may face greater financial upheaval due to the demands of older and younger generations for monetary support. A recent survey conducted for Ameriprise Financial shows that close to 90 percent of baby boomers are providing at least some form of financial help to their adult children. The generosity doesn’t stop there. A considerable number also contribute dollars to support their aging parents, ranging from buying groceries to paying for long-term care.
This puts boomers squarely in the middle, or “sandwiched” between older and younger generations. While some may have thought the years approaching retirement would be focused on building a nest egg, the reality for many is that both parents and adult children are placing financial demands that can hamper the ability to save for their own needs.
Keeping your priorities straight
According to the recent study, most boomer-aged parents who provide financial support for adult children say that they are able to do so without jeopardizing their own retirement savings. Only six percent claim to use money that would otherwise be targeted for retirement to help fund the current needs of one of their offspring.
That does not diminish the fact that offering such help places an extra burden on boomers if faced with this situation. Only nine percent of boomers surveyed believe providing assistance to their parents has had a negative impact on their own retirement savings, while 29 percent expressed a concern that the financial help they provide to adult children has detracted from their retirement plan.
Are you being stretched too far?
The challenge of the “sandwich generation” of boomers who provide financial support for other generations in their family is whether they can meet their retirement goals. According to The 2007 Retirement Confidence Survey by the Employee Benefit Retirement Institute, one in four boomers has saved less than $10,000 for retirement while another 45 percent have saved only $50,000.
While no one questions the generosity of parents willing to help even their adult children through difficult financial times, most boomer-aged parents recognize the need to protect their retirement. The Ameriprise study shows that about two-thirds of boomers said if given the choice between saving money for their own retirement or helping adult children with money to purchase a car or pay off credit card debt, they would favor their own retirement needs.
Time to open up
Now may be a good time to talk more openly with your children about financial matters. If you have been lending them a helping hand, make sure they understand why you did it and the expectations you have for them. If you are struggling to meet your own retirement savings goals, share that with them so they understand that they can play a helpful role by putting fewer demands on you for financial help.
Generational discussions can be a healthy exercise, especially if you are feeling at all financially constrained by having to provide financial support for other family members. The greatest risk is letting your own financial goals such as saving for retirement take a backseat to the current demands of parents or children.
A financial advisor can help jumpstart conversation about money with family members as well as help identify a plan for retirement.
About the study

Working with GfK Roper Public Affairs, a leading global marketing research and consulting firm, Ameriprise Financial launched the national study in April and May 2007. Telephone interviews were conducted among 1,001 affluent baby boomers (those with $100,000 or more investable assets); 300 parents of baby boomers; and 301 children of baby boomers at least 18 years old. Survey data were weighted to Current Population Survey statistics. 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. To help shape the research study, focus groups were conducted with boomers in San Francisco, Miami, Denver, and Dallas to explore intergenerational issues affecting their daily lives. Copies of the study report are available at Ameriprise.com/presscenter.

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