Baby boomers are not always associated with the concept of putting others first. Hence, their moniker, “the Me generation.”
But a new survey casts some doubt on that stereotype, with obvious implications for advisors who serve this market.
The “Lincoln Long Life Survey” published by the Lincoln Retirement Institute, Philadelphia, covers various retirement readiness issues and includes a look at the priorities of successful people in their 60s.
The main priority for this group–”family” –was at the top of the list, starting with the spouse. In addition:
o 89% of the average 60-year-old couples are married.
o Over 80% of the marrieds say they rely on their spouses for advice on figuring out joint income needs in retirement.
o 71% of respondents say they strongly considered how the surviving spouse will receive income in event of their own death.
Doesn’t sound much like the Me generation.
True, the survey does not zero in directly on boomers, allows David Kittridge, director to the Institute, which is a unit of Lincoln Financial Group. But he says advisors can use the findings to gain insight into generational issues that may be impacting boomer clients, some of whom are adult children of people in their 60s and others of whom are nearly 60 themselves.
Also, some of the issues that 60-year-olds are facing are similar to the ones that boomers will be, or already are, encountering, he says.
For example, Kittridge says, “my own parents are in their 60s, and they like to stay connected. I’m a boomer, so it [involvement in the family relationship] is part of my family dynamics.”
This connectedness will continue for most boomers, provided they are willing to interact with that lifestyle, he says.
Also, the younger boomers whose parents are in their 60s will be learning from their parents, how they age and go through retirement challenges.
All of this has financial implications, Kittridge stresses.
The interest in family and personal relationships is pronounced. For instance, the survey found that 59% of the “successful 60s,” as the survey labels the respondents, visit family more than once a week. And 83% say it is extremely or very important to be respected by family and friends.
(Note: In the survey conducted by Mathew Greenwald & Associates, Washington, the “successful 60s” comprise a random group of 500 people with annual household income of $75,000+ and household assets, excluding real estate, of $300,000+.)
The relationship orientation of the successful 60s involves more than caring about family and friends. Many of these individuals also are experiencing intergenerational squeeze, says Kittridge.
For example, a large number of the 60-year-olds, 62%, provide “significant financial support” to relatives. And, 94% of those with a parent or in-law living in the home identify themselves as the “sole supporter” or “heavy financial contributor” to that in-law. Over half (54%) say they are the sole financial supporter of at least one child or stepchild, and another 30% are heavy contributors.
“Without financial wherewithal, financial solutions can’t be achieved,” Kittridge says.
The boomer children of those 60-year-olds may soon find themselves experiencing the same sort of pressure, being squeezed by the needs of their own parents and of their own adult children, he continues.
“Even if a boomer has an ‘I care about me’ attitude, the boomer’s children may expect it,” Kittridge cautions.
That is, the children, having witnessed how the 60-year-olds responded to the squeeze, may expect their own boomer parents to respond similarly to the family’s intergenerational needs.
Is this showing up in client interactions with advisors? “Yes,” says Michael Byrne, a financial advisor with Lincoln Financial Advisors, Cherry Hill, N.J. “Being close to the children and grandchildren is very important, especially for the wife.”
In fact, many of his clients have packed up and moved to Florida for their retirement, only to pack up again and move back home–to be near the family, he says.
“It’s gotten to the point that we now counsel people who go to Florida to rent there first. Then, they can decide if they want to stay or come back.”
Because relationships are so important to many boomers and older clients, Byrne says his firm routinely builds flexibility into the financial plans of those clients. This can show up in plan design, cost structure, options and other areas, to enable clients to respond to family needs as necessary.
Some 50- and 60-year-olds have grown children who are still dependent on them, he notes (a trend that the survey also caught).
“As a result, we often build a ‘subsidy’ for the adult kids right into the plan.” That subsidy might be used to pay for a child’s apartment, pay the child’s gas, and so on.
“It’s love for the child” that sways these clients to want to help their children financially, Byrne says.
“Another factor is the parent’s perception that it’s more difficult for kids today to get started than it was for themselves.”
Personal relationships, especially family relationships, absolutely are impacting boomers’ financial decisions, agrees Walter J. Robinson, director, health insurance, at Booth Financial Associates, Norwalk, Conn.
In fact, he believes they are “key” to successful interactions with advisors.
For instance, one couple Robinson counsels has the wife’s mother living in their house. The mother is caring for the grandchildren while both parents work in professional capacities.
In one session with the couple, Robinson asked what would happen if the wife’s mother later needed care. Who would care for the older woman? The children? Would someone quit work? What was the plan?
“All the family dynamics kick in when dealing with relationship issues like this,” says Robinson.
In this particular case, the couple concluded they could not afford to have one spouse stay home from work–”because of the lifestyle they had created. They wanted it to continue,” Robinson says.
The solution: The couple bought a long term care policy for the mother. “That will enable the couple to survive financially if the mother needs care,” he says.
“It will also help the spouses maintain their relationship,” he says. Without such a plan, the wife could easily become overwhelmed if her mother declines and needs care. The marriage could suffer under the pressure, he says.
Robinson tells of another case, where a man who had cared for his wife for several years until her death later bought an LTC policy on himself. The premium was for the maximum daily benefit the man could afford. He wanted the inflation benefit but found the cost prohibitive.
That’s where the family relationships came into play. After several discussions, the man’s children ended up chipping in to pay for the inflation rider, Robinson says. They saw it as a financial decision that will help provide for their father’s future care while also protecting the family home as the inheritance.
When caregiving events occur, “there is a sense of equity being torn,” observes Byrne. “It’s that squeeze, especially when the adult child still is getting money from the parent,” that produces turmoil, he says.
Some families will just throw up their hands and find a home for mom, Byrne continues. Other times, a sibling will take mom into his own home or a relative will move into the parent’s home.
Either way, financial products can support families as they seek solutions, Byrne stresses.
For example, he will use an annuity with a principal guarantee and an income for life feature. And he uses LTC policies, especially when the concern is that a spend-down from a spouse’s illness will leave the other spouse impoverished.
No conversations with boomers and older clients will be productive if the family members don’t care, maintains Robinson, and in those situations, the advisor should just move on.
However, Robinson says many boomers do care. If the advisor asks the right questions and lets the clients talk and see their own situations, how things will really be, he believes most clients identify their caring feelings and make good decisions in light of relationship realities.
This is especially important when discussing LTC issues where emotions can run high, Robinson says. It also can come into play when discussing using annuities to leave a legacy.
Actually, both LTC and annuity contracts have legacy implications and relationship themes, he says. “The annuity takes care of the question, ‘do you want to leave something to the kids?’ while the LTC policy takes care of the question, ‘how can you be sure something is left?’”
If a client says, “mom [my wife, etc.] can take care of herself” or “it’s not my problem,” the advisor is wasting his or her time, suggests Robinson. “Work with clients who care about their relationships.”
Despite the importance of family, it is rare for parents to bring their adult children into the financial planning sessions, notes Byrne. It may happen if there is a family business that is in transition, he says, but mostly, the parents do not want their children to know what they have–so they can maintain the flexibility.
Also, the parents may be concerned that, if the adult children do know how much the parents have, the children may then alter their lifestyle, based on that knowledge. It also can create financial disincentives, perhaps spurring a child not to fund a 401(k) or take other financially responsible steps, he says.
“Deep down, most parents want to grow independent children,” he says.
Not insignificantly, the survey found that independence is important to the 60-somethings, too.
Fully 95% ranked being able to maintain financial independence as extremely or very important, followed by being able to live independently (94%) and having a secure stream of income for the rest of life (92%).
In addition, participants put greater priority on having close personal relationships (83%) and having free time for oneself (69%) than on one’s love or sex life (59%).
The survey found that one-third of retirees continue to work, both part and full time. Top reasons cited for continued work were: enjoyment, income needs and intellectual stimulation.
Work can cut into the amount of time available for maintaining close relationships, allows Kittridge. But it probably is not a pressure point, unless the person is working out of financial need.
If people take steps early, to prepare for retirement years, this will help, he says. The message is, “financial readiness, and sooner rather than later,” he says.