We look forward to retirement – some investment or pension income, manageable debt, and long days with no agenda and no time clock. But, according to some recent studies, retirees are experiencing family financial responsibilities long after their careers end. The financial challenges of retirement have developed from changes in societal trends. Although the specific studies focus on the US market, the implications for Canadian HNW individuals may be very similar and could be the basis of an interesting study.

The basic challenges to retirement ‘freedom’ appear to be in three buckets:

• Parenthood doesn’t retire.  It is no longer just an issue of a child moving back into Mom and Dad’s home after high school or college. Adult children and other younger relatives are increasingly turning to older family members to help smooth financial trials they experience caused by an uncertain economy and volatile job market. This may be due to the short time they have been in the workforce and opportunities to develop a ‘fall back’ fund, or, it may be because they have not taken advantage of the ‘good times’ to put something away for a rainy day.
• Longer lives, longer needs. Modern medicine and day-to-day conveniences have created an environment that fosters longevity. Parents and other older family members of today’s young workforce are living significantly longer, requiring a longer period of emotional, physical, and financial support.
• Savings Stress. It is not only the young workforce that fails to plan sufficiently for the future. Many retirees or those about to retire have not managed savings and investments for their own retirement support, let alone the support of other family members.

The solution appears to be a proactive approach to the retirement discussion. Studies have revealed that these discussions typically do not occur until a crisis is at hand. Although some family member financial needs may materialize as emergencies, it’s important to consider certain financial topics when planning for retirement. Discussions with spouses, children, and other extended family members, as appropriate, may include, but may not be limited to:

• Level of financial security that is expected after retirement and the resources available;
• Plans for living arrangements in retirement, status of the family home, and plans for retirement community living;
• Inheritance issues; and,
• Long-term health care.

Initiating financial discussions with spouses and adult children increases peace of mind for all family members and helps each member to be well-prepared for retirement.