Campbell Wealth March 2018


Your children turned to you for support all their lives. As babies, you provided them with food and shelter, and throughout their childhood, you guided them and led by example. But if you’ve continued to provide them with financial support into their adulthood, the lifestyle shift that comes with your retirement might come as a surprise to both of you. If your children are still dependent on you for financial support, it’s important to have a conversation about what might change with your retirement. It’s time to consider how your well-intentioned support will affect your retirement plans. CONSIDER THE COSTS A study by Merrill Lynch and Age Wave found that, on average, parents over 50 gave their children a total of $6,500 a year. When you compare that 6K to your current income, it might not look like much, but consider what that amount could do if you invested it into your retirement. Diane Harris, a personal finance journalist, explains, “If, instead, you saved that much cash every year in a tax-deferred account averaging 6 percent annual gains, you’d have close to $100,000 more for retirement within a decade.” MAKE A PLAN Once you consider what you’re contributing to your child’s lifestyle, you need to find out how it’s going to affect your ability to retire. It’s time to have the tough conversations. Before you talk to your kids, meet with your financial advisor and discuss your retirement goals. Your advisor

can give you a reality check if your goals are not in line with your current lifestyle and tell you what needs to change to get them there. THE TALK After your meeting with your advisor, it’s time to talk with your children. Explain how your retirement plan is going to affect them. It’s best to be honest and transparent. Let them know that this isn’t about your feelings for them and give them time to process the information. Remember that even if your retirement has been top of mind for you, it may not be on their radar. Erin Lowry, author of “Broke Millennial,” reminds us, “Adult children can’t be expected to know how ongoing support is affecting your finances if you haven’t talked to them about it.” If you can help them understand how the change will impact them and maybe even help them plan for it, you can open up that conversation and reduce tension around it. Instead of looking at the end of financial support as a loss, frame it as an opportunity. It’s an opportunity for your child to find financial independence, and while the journey can be rough, it will benefit everyone in the long term. Examples presented are and are not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

Defining Retirement for Yourself What Does It Mean to You?

Retirement means something different for everyone. For one person, it may mean an exciting new beginning. For someone else, it can be a source of stress and anxiety, and they may feel uncertain. When you’ve had a long career or you’ve dedicated your life to a certain industry or way of thinking, the shift into retirement can be a challenge. This often holds true even when you are financially prepared. People look at retirement through different lenses. We develop our views as we watch our parents, friends, and co-workers retire through the years. How do you define retirement? The Harvard Business Review (HBR) examined the topic at length, showcasing a variety of perspectives from future and current retirees. Those perspectives were expressed by analogies that answered the question, “What does retirement mean to you?” Here is how HBR broke down those analogies.

DETOX: The cleansing experience of getting away from an unhealthy, stressful working life. LIBERATION: Being released from the constraints and restrictions of work, running toward a newfound freedom. DOWNSHIFTING: Gaining time through the transition to a slower pace of life. STAYING THE COURSE: Continued engagement and contribution by using your professional skills in different settings. MILESTONE: Reaching a pinnacle and achieving a goal, a marker of the end of one phase and the beginning of another.

TRANSFORMATION: A positive adaptation to a new role or lifestyle, taking on a new identity.

LOSS: A lack of purpose, fear of being forgotten, or threat to your identity.

As HBR points out, most retirees don’t necessarily fall into one category or stick with one way of thinking. Retirement is ever-changing. You may end your career concerned about what comes next, only to realize you feel liberated. What does retirement mean to you?

RENAISSANCE: A new beginning, a new chapter, or a blank canvas, offering possibilities to pursue your interests or passions.

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