Family Checkbook: Retirement planning can be a complex task

Family Checkbook: Retirement planning can be a complex task

By Kathy Sweedler/University of Illinois Extension

During Money Smart Week, I participated in Route Your Retirement. During this interactive retirement fair, participants were asked a series of intriguing questions to help them estimate their retirement income needs.

The questions asked made me, and other participants, stop and think about what we really wanted during retirement. For example, where do we plan to live? Do we expect expenses related to hobbies or recreation? Do we plan to travel, and if so, how often, and overseas or not? Taking time to answer questions like these is an important step toward retirement planning.

Retirement planning is complex. Not only do we need to estimate how much income we need annually, we also need to predict how long we will live. When I thought about my retirement when I was in my 30s and 40s, most of my thinking was about what I would need and what exotic places my husband and I would travel to. But now that I'm older, I've been thinking more about family financial obligations later in life. And, how these possible obligations affect my retirement planning.

People feel differently about family and especially financial obligations. When planning for your retirement, talking about your feelings with your spouse is an excellent idea. You need to know how each feels about possible obligations as you plan for your retirement.

Here lately, I have been hearing from many people in retirement who are concerned that their retirement savings may not last due to their decisions to help their children (and grandchildren) financially.

What type of questions should you ask yourself? A study by The MetLife Mature Market Institute, "Multi-Generational Views on Family Financial Obligations," provides insights to the challenging issues people face as they near or enter retirement.

According to the MetLife survey results, 48 percent of respondents feel a strong responsibility and another 28 percent a moderate responsibility to provide financial support for their children's higher education. Only 23 percent felt a slight or no responsibility. Have you thought about how much help you will provide for your children's education? Often this obligation comes due at the time people would traditionally increase their retirement savings. However, with today's costs of a college education, people may feel pulled between these two financial goals.

Do you feel responsible to help your children financially if they experience a financial setback through no fault of their own? Most survey respondents do. Only 23 percent felt slight or no responsibility. However, people felt differently about this obligation if children were in debt due to overspending. Then, 71 percent of respondents did not feel obligated.

I feel more challenged by the following question: Do I feel financially responsible to contribute to my children's down payment on a house? In the survey, only 24 percent of respondents felt strongly or moderately responsible, and 76 percent felt either slight or no responsibility.

Once your children are financially launched, can you then concentrate on your retirement desires? Maybe yes or maybe no. Clearly, there's no absolute answers to any of these questions, but here are more questions to ponder.

Will you feel an obligation to provide financial support to your parents or in-laws in their later years if they have financial difficulty? In the study, 77 percent of respondents said they felt a moderate to strong responsibility to help.

Do you have an obligation to your family even after you die? In other words, do you plan to enjoy your retirement or leave an inheritance to your children? For most of the questions, the responses of Baby Boomers (born between 1946 and 1964) versus Generation X (1965-1976) or Generation Y (1977-1990) were very similar.

However, 70 percent of Baby Boomers felt that enjoying retirement was a higher priority than leaving an inheritance to their children. In contrast, only 67 percent of Gen X and 57 percent of Gen Y felt enjoying retirement was a higher priority. I wonder, how will Gen X and Y feel about this when they are closer to retiring?

While we may not know exactly how we will respond to these types of situations unless they arise in our families, it can be helpful to think about our family financial obligations and to make these a part of our retirement plan.

Kathy Sweedler is a consumer economics educator at the University of Illinois Extension. Contact her at 333-7672 or email

Sections (1):Living
Topics (2):Economy, People

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carlyt wrote on April 29, 2014 at 8:04 am

The best chance of retiring on your own terms is to start planning and saving/investing early in life, be consistent, take advantage of any employer matching plan, max out contributions when possible, eliminate debt, avoid risks with your nest egg and plan for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.).  There is a great deal of information about retirement available on the web.  I use several sites including the site Retirement And Good Living which provides information on finances, health, retirement locations, part time work and also has a great blog of guest posts about a variety of retirement topics.