Oct. 9, 2019
The term “The Greatest Generation ” comes from the title of the 1998 book by journalist Tom Brokaw about the generation of Americans who came of age during World War II. Speaking of their service, Brokaw wrote: “these men and women fought not for fame or recognition, but because it was the right thing to do .” Members of this generation were also, by and large, the parents of my generation, the Baby Boomers. As a group, the Greatest Generation were revered for their stoicism—many grew up during the Great Depression, had a strong work ethic, and as Brokaw points out, exemplified courage, sacrifice, and honor. But there’s one thing they weren’t so great at—talking about money.
Part of that reluctance may have come from a sense of discomfort about money. After all, many had seen their own parents lose everything during the depression. But more often than not, the reluctance to talk about money and finances seems to come down to what was and was not considered polite conversation. As a result, my own generation grew up learning that money, like sex and religion, was a topic to be avoided in polite company. However, when the social taboo of talking about money extends to your most important relationships, your spouse, partner, parents, and children—that can spell trouble.
A study titled Disconnects on Retirement Expectations, Social Security and Income helps spell out why. According to the study, 72% of couples say they communicate “exceptionally” or “very well.” However, 43% failed to correctly identify how much their partner makes—and 10% got it wrong by $25,000 or more. In addition, 36% of couples disagreed on the amount of the household’s investable assets and how much they would need to save to maintain their current lifestyle in retirement. Nearly half had “no idea,” and 47% disagreed about the amount needed. When asked to estimate their Social Security payout in retirement, 60% of couples said they either didn’t know or weren’t sure. Even more concerning: 49% of Boomers fell into this category.
In a separate study, two-thirds of Americans said their family or parents influenced their saving and spending habits, but only 56% of American parents said they have actually talked with their kids about money.
While these results are not surprising to those of us in advisory roles, they are nonetheless concerning. In the past decade alone, I’ve worked with numerous clients, family members, and friends who have struggled with convincing aging parents and loved ones to openly discuss their financial situations in the hopes of allowing adult children or other trusted family members to help manage day-to-day finances. And as more women have taken the lead in managing household budgets, day-to-day financial decisions, and investments in recent years, we’re now seeing a greater number of men who are not as tapped into the family finances as they may need to be.
After more than three decades counseling and consulting with families on all-matters-money, I can say without hesitation that no topic brings a broader array of emotions to the table, including hope, joy, confidence, shame, and anxiety. While conversation about money and finances can be difficult, it doesn’t have to be that way. Good, honest and productive communication can cut through the negative emotions, including the anxiety that many people feel, to arrive at a place of hope and confidence about the future. That begins with understanding that financial decisions are value decisions.
Recognize what’s behind your financial decisions
What we spend our money on, and how much we save is a good indication of what we value most in life. For some families, an annual family vacation may be non-negotiable because it speaks to the important role that being present for family plays in their lives, and the value they place on creating cherished memories.
However, because financial decisions are a direct reflection of our values, conversations can become contentious, especially when money gets tight, or partners have very different perspectives about how it should be spent, saved or invested. If both partners aren’t on the same page, that can breed resentment. That’s why the first step to improving communications with your partner is to discuss your shared values. What are the priorities you both agree on? Write those down. Your shared values form a foundation you can build upon.
Make time to talk about your finances
Next, make time to discuss money matters when you’re not stressed or in the middle of a crisis. While this is critical for couples, it’s just as important when you’re discussing financial matters with aging parents or your own children. For example, waiting until mom loses her independence following a sudden illness or injury is not the ideal time to discuss how assisted living arrangements and out-of-pocket medical bills will be paid for, or where she does her banking. Having a plan in place before a crisis occurs can go a long way toward reducing stress for all involved.
Don’t underestimate your partner’s willingness to be involved
The retirement expectations study found that the vast majority of couples where one partner is the primary decision maker believed their partner did not want to be more involved. However, one-third of the couples surveyed disagreed, suggesting that respondents underestimated the extent to which the less-involved spouse would like to be involved. If you’re not sure if your partner would like to be more involved, or you welcome the help, ask your partner what he or she feels comfortable taking on.
If you handle 100% of the bill paying and financial decisions simply because you prefer to be in control, keep in mind that it might not be a wise decision over time. None of us is immune to unexpected events, such as an accident or sudden illness. Knowing that your partner has the knowledge and access to resources to manage your finances if or when you’re unable to do so, can provide greater peace of mind for both of you.
Share the location of important legal and financial documents
While you’re at it, make sure your partner, adult children, or a trusted relative or friend knows where to find important legal and financial documents, such as your living will, trust, powers of attorney, and financial account statements in the event you need them to step in and help, should you become ill or incapacitated.
Don’t be afraid to bring in the pros
Whether it’s retirement, education, or eldercare planning, recognize when it makes sense to seek the help of professional tax, legal and financial advisors. Professional advisors can help you solve complex challenges and put a plan in place that’s aligned with your values. According to the retirement expectations study, couples who have taken time to develop a detailed retirement plan are more aligned and feel better prepared than those who have not. They’re also twice as likely to expect a “very comfortable” retirement.
Working with a fiduciary advisor to develop a comprehensive financial plan provides many benefits, including a clear path to help you move forward together, toward your goals. Your advisor will regularly monitor and adjust your plan, keeping you on track as your life and your goals change over time.
Your advisor can also be a great resource for mediating family conflict. As an objective third-party advocating for the family’s best interests, your advisor can help dial down the heat should family members disagree on important estate planning, family business or other matters that impact multiple family members.
Still need a reason to start talking about money with the people who mean the most to you? Take a tip from Brokaw, “it’s the right thing to do.”