So the kids have made their way through college. They're launched into the world of work and creating their own families. We're still their parents, of course, but the financial part is over. We can now center our financial plans around us and our retirement needs. At least that's what we're thinking.
Think again. Turns out that for many of us, that was an incorrect assumption. A Merrill Lynch Retirement Study, conducted in partnership with Age Wave, finds that 62 percent of those of us older than 50 have provided financial assistance--a helping hand--to family members during the last five years and that most of us never budgeted to do so.
A few other points from the report ("Family & Retirement: The Elephant in the Room.")
Payback: Those helping family members rarely do so because they expect future help or financial payback. Older adults are 20x more likely to say they are helping family because “it is the right thing to do” than because “family members will help me in the future.” They are 5x more likely to stop family support because the recipient is not using the money wisely than because of worries about being paid back.
--The Now Factor: Those giving money to family members are 3x more likely to feel “appreciated” than “taken advantage of.” This generational generosity also extends to a shift in mindset regarding inheritance and giving to family. Three in five (60%) people age 50+ say it is better to pass on their assets now rather than waiting until end of life. Age 50+ women are even more likely than men to say it is better to pass on inheritance during retirement (65% vs. 53%).
--Favorite Subsidies: We tend to help out our adult children by paying for rent or mortgage payments, insurance, cellphone bills, car purchases or leases and tuition expenses. These subsidies averaged a total of $9,200 over the past five years among people with less than $250,000 in investible assets, and $19,100 for people with between $250,000 and $500,000 in investible assets. Among the very wealthy (those with more than $5,000,000 in investible assets), the average five-year family outlay was $313,000.
--The Stepkids: Adults age 50+ generally feel some financial responsibility for stepfamily members (most particularly stepchildren), but usually less responsibility than they feel for biological relatives. That said, three in ten (32%) also say that they and their spouses have different financial priorities for their own children than they have for their stepchildren. Those with stepchildren are less likely to divide their assets equally than those without stepchildren.