Talking about finances can be difficult for multi-generational and multi-generational families as millennials … [+]
Americans think they need $1.27 billion to retire adequately, according to a 2023 Northwestern Mutual survey. That estimate continues to rise, from $1.25 million reported last year.
But the median retirement savings for all working-age households in the U.S. — people ages 32 to 61 — is about $95,776, according to Institute of Economic Policy.
As a first-generation American from an immigrant family, I found it very difficult to talk about money with my parents as they reached retirement age due to a lack of transparency about their finances and my lack of confidence in having difficult financial conversations.
Here are three tips to make your money-making conversations less difficult — especially if you’re someone who’s expecting to help support aging parents along with your own financial planning.
Share your own money journey and what you’re learning along the way
My family often joked about how “cheap” my husband and I looked because we drove a $3,000 car and didn’t eat out as often as they did. They assumed we were overly frugal because we had well-paying jobs. But what they didn’t see was the daily stress we felt from over $300,000 in debt between student loans and two mortgages.
Many of my first-generation financial education students share feelings of guilt or shame for prioritizing their own decisions over their families because of the collectivist cultures in which they grew up. However, when my husband and I quietly paid off $72,000 in student loans, our mortgage in our 30s, and started a business, my family began to ask questions about how we were achieving these goals.
I shared the net worth tracker, our budgeting routine, and how “cheap” options allowed us to achieve FIRE (financial independence, early retirement) — a concept they had never heard of before. We didn’t talk about it again until a few years later, and I found out my husband’s parents made extra mortgage payments and paid off their house. They thought it only made sense to do so after seeing how our actions changed our lives for the better.
In retrospect, I wish I had discussed our finances with my family much earlier. But now we talk about money more openly and my in-laws feel more comfortable asking questions about money because we shared details with them first.
Listen to their concerns before judging their money habits
Although I have been married to my husband’s family for 12 years, we have never discussed our parents’ retirement plans. When my mother-in-law started thinking about retirement, I learned that she was afraid of retirement. Her fear was not without reason.
Despite having a financial planner for many years, my mother-in-law had no idea if she and her husband had enough money to retire. Federal Reserve data show that the median balance in a retirement account in 2019 for a household nearing retirement (ages 55 to 64) was just $144,000.
At first, I thought he was withholding financial information from us, but it turned out to be more about the fear that they had worked hard for decades and still didn’t think they had saved enough money. She was also afraid to ask her financial advisor questions because she thought she should know the answers.
I also hadn’t considered that my parents were bound to believe that work equals value. I watched my father experience a loss of identity when he retired, spending years searching for ways to still feel that he was valuable. Before you judge what may seem unreasonable or unreasonable behavior from your parents, ask them what bothers them or where their ideas about money came from.
You don’t have to agree with them or follow their lead. But asking about their money worries can help you understand how they choose to spend or save their money.
Lead your parents by example and plan your own estate
The Baby Boomer generation is expected to leave more than $68 trillion to their millennial children in the coming decades. However, two out of three Americans do not have any type of estate planning document, according to a Caring.com study.
I recently attended the funeral of a close family friend’s grandmother and later learned that the family really struggled to support the financial obligations left behind. The grandmother’s death also began to spark conversations with the grandchildren about how they had no insight into their parents’ finances and whether they were expected to shoulder future health and living expenses.
Even though I’m relatively healthy and in my 30s, I insist that my husband and I review our estate plan annually since my father died without documentation.
It’s not a fun exercise by any means, but the annual reminder to review all of our assets and securities also provides a deeper review of the relationships that matter to us. It equipped me to have a more informed conversation with my mother, who still refuses to have any documentation.
At least I knew enough from going through my own draft to know what questions to ask and write down the answers I got, even if they weren’t complete.
With the holidays and the New Year approaching, you may not want to have full financial discussions with your family. But it doesn’t hurt to start opening up these kinds of conversations. Little by little, you can make money feel less awkward with your parents over time and hopefully gain the peace of mind you need to help them and yourself in the future.
