Let’s Talk: Generational Habits and Conversations about Money and Retirement Planning

You have probably heard plenty of old platitudes about the importance of taking action. For many, “if you’re going to talk the talk, you’ve got to walk the walk” is one such truism. But in money matters, people often hesitate to prepare for their retirement future. For that matter, they might not even discuss it with their family and other loved ones.

In various research studies, the findings are stifling. Not only are Americans struggling with retirement readiness, debt, and living within their financial means. They may limit themselves in their discussions of financial matters. Money may be a taboo subject or people may be embarrassed about their personal financial circumstances to the point of not wanting to discuss them – not to mention other possible factors.

So, just how are Americans going about retirement and financial topics? And how might this affect future generational spending and saving practices? Let’s dive into the numbers.

Some Generational Trends on Retirement

Financial discussions happen, but they are often limited. In a recent Family Wealth Checkup study, Amerprise Advisors found that families tend to avoid conversations over complex or long-term financial matters. Instead, these conversations tended to revolve around more immediate expenditures, especially in conversations started by parents with their adult children.

Image credit: Ameriprise Advisors, Link to content, all rights reserved.

Without these conversations of long-term financial goals and needs, the “transmission” of sound money practices can fall short to future generations. These Americans may not hold good “financial role models” after which to model their behavior and thoughts about money matters.

Repeating the mistakes of the past. Part of effective financial planning, especially with a spouse or partner, means learning from mistakes of past generations. Yet in some research, it appears that Gen Xers are repeating some of their parents’ mistakes.

In research by Financial Finesse, mistakes that Gen Xers and Baby Boomers struggled with included:

• Not saving enough for retirement
• Wealth not having adequate protection
• Having a lack of emergency funds
• Living beyond financial means

Where Baby Boomers and Gen Xers differed was in one financial vulnerability. 46% of boomers didn’t have adequate protection for their wealth as a top mistake, whereas 40% of Gen Xers were prone to live beyond their means as a top mistake.

Financial pressures from supporting loved ones and others. Even as younger generations struggle with making mistakes of the past, they are increasingly responsible for supporting parents and other loved ones. This financial support has remained static from year to year. For example, Pew Research Center documented findings reported in 2013 and 2015 that several middle-generation Americans were providing financial support to their parents and children. In 2015, 20% of Americans had given financial support to a parent or grown child in the past 12 months. That cost these financial supporters about $630 billion.

What are some interpretative takeaways from these findings? Without robust role models to follow for good financial habits, future generations may repeat the mistakes of their parents. This can lead to retirement or financial shortfalls, such as having a sufficient amount of savings for retirement – especially as life expectancies get longer. Americans may continue with excessive spending patterns instead of putting away money for their futures. Future generations may also have heavier financial pressures if the trend of parental support, not to mention of potentially others, continues.

This study, as well as other research findings showing that Americans struggle with financial wellness, shows the importance of preparing for retirement, starting today.

Ready for Personal Retirement Guidance?

When you are ready to plan for your retirement future, financial professionals at SafeMoney.com can help you. They will enable you to discover financial strategies to preserve your money, generate steady income you can’t outlive, create a predictable lifestyle, and enjoy more financial security. To get started, request a no-obligation financial goal discovery meeting. We invite you to connect with a financial professional through our Find a Licensed Advisor section, or if you need a direct referral, call us at 877.476.9723.