If you’re a parent, you probably remember the early days when your toddler was just learning to walk. You’d gleefully watch, trying to balance your desire to help with your desire to help them learn how to help themselves.
Fast forward: your toddler is now a young adult, and may even have toddlers of their own. They may also have something else that comes with adulthood: financial challenges. A 2012 Money Across Generations IISM study commissioned by Ameriprise Financial, Inc., found that 20% of baby boomers’ adult children report living one day to the next.
The good news is you may be in a position to help. And more good news: by helping, you can begin reducing your estate – which can, in turn, reduce estate taxes and shift the fruits of your labors where they belong: to your heirs.
Financial support, yes, but how?
Baby boomers are a generous group. The Ameriprise study also found that 93% of baby boomers had provided some kind of financial support to their adult children. But it is not a decision to take lightly. You want to intervene but also empower (remember the toddler/parent scenario?), with help that’s meaningful and makes financial sense – for both of you.
To start, take cash off the table as an option. Consider this an opportunity to combine purpose-driven strategy with meaningful discussions about values, priorities and goals. Remember: your objective is to balance your desire to help with your desire to be helpful.
If it’s possible to meet in person, face-to-face conversation is the best gateway to healthy win-win solutions. Call a family meeting. Start off by stating your two-way objectives. Emphasize that you want collaboration to drive the discussion. Encourage an empathic, in-each-others’-shoes approach. Finally, ask everyone around the table to think long-term.
Next, discuss circumstances and consequences. For instance:
- General: Where, in life, are you/your children?
- Health: Are your kids sufficiently covered by insurance? What are they doing to perpetuate healthy living within their family?
- Education: Could planning for higher-education financial assistance ensure both quality education for your grandchild and stress reduction for his/her parent?
- Quality of life #1: Has stress overload become the next-gen’s M.O.? If so, would stress relief open doors to higher productivity, long-term health benefits and increased overall happiness?
- Quality of life #2: Is a new home in your child’s unavoidable or desired future?
- Financial: Can you help soften the blow of specific short- and long-term expenses?
- Planning: Is this a one-time gift? An annual gift? A combination?
Suggestions, benefits and pitfalls
The possibilities for non-cash gifts are practically endless.
The ultimate love note: intervention that empowers
Finally, keep your own financial needs and retirement in mind. We all want to be generous with our children, but if we do so at the expense of our own retirement, it could come back to bite our kids one day when the shoe is on the other foot and they find themselves carrying our financial burdens.
As you prepare to have “the talk,” view it as an opportunity for healthy communication and connection that leads to confidence and ease-of-mind. And remember: it’s all about balancing your desire to help with your desire to help your children learn how to help themselves. It’s about helping while being helpful. It’s about intervening in a way that empowers. It’s what we at PARTNERSINWEALTH strive to do for our clients: put you in control so you can live life with confidence and relief.
For more information, helpful guideposts or professional assistance, please contact your PERSONALCFOat PARTNERSINWEALTH or Jim Waters, CFP® at 713.964.4028 or email@example.com.