One-third of parents of millennials say that their children are a financial strain that could ultimately take a toll on their own retirement. That’s the ongoing challenge that the boomers face. When it comes to managing their money, this generation needs to nudge their millennials towards financial independence or place their own retirement plans at risk.
A recent report by the Financial Planning Standards Council specifically states that:
Interestingly, the report also shows that men are more likely than women to help their children with the purchase of their first home; 22% would even tap into their own home equity to provide this help. Parents are also more likely to provide this assistance to their centennial and Generation Z children (43%), than to their Generation Y or millennial children.
But these generations have a lot of heart and this provides an opportunity for a discussion about money. As we’ve previously reported, many millennials have the desire to make an impact in the world through philanthropy and sustainable investing in initiatives that they’re passionate about. Advisors and parents can seize this opportunity, not only to provide specific advice in this area, but also to introduce broader wealth management guidance.
Although millennials appear to be more ahead of the game when it comes to retirement planning than generations before them, that’s in part due to the financial assistance provided by their boomer parents. To truly set future generations up for financial success, it is critical that boomers have frank discussions with their children about how to meet their goals for the future and the best way to transfer family wealth in a tax-efficient way. Great options? Saving in RESPs, RRSPs, and TFSAs.
Advisors can play a key role in facilitating these intergenerational conversations about money and financial goals. This more holistic wealth management focus would ensure that financial comfort is available to every member in a family’s line of succession.
Additional educational resources: Get the skills you need to address the growing complexities that affect family wealth management strategies. Earn your Real Wealth Manager or MFA – Retirement and Succession Services Specialist credentials. Or as a taxpayer, get a great start on one of the most important aspects of financial literacy by taking a tax course.
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