Retirement planning is no longer solely about the needs of an individual or couple, but should factor in family complexities and financial interdependencies, Merrill Lynch says in a new report.

Retirement planning is no longer solely about the needs of an
individual or couple, but should account for family complexities and related financial
interdependencies, according to the High
Net Worth Spotlight from Merrill Lynch’s Family & Retirement: The Elephant in the Room survey.

For
the spotlight report, data was collected and analyzed from 303 HNW respondents
with assets of at least $5 million. The survey was conducted online in partnership
with Age Wave in August by Harris Interactive. To view
findings from the Family & Retirement: The Elephant in the Room survey,
click here.

“The confluence of three major
forces: (1) economic troubles and career stalls among adult children and young
relatives, (2) rising longevity—with the growing phenomenon of prolonged (and
often expensive) healthcare needs—among boomers’ parents, and (3) the need to
balance often pressing concerns for one’s own retirement needs with the needs
of family members—have created a tipping point that makes it more important
than ever to understand and create solutions for family challenges and interdependencies
throughout retirement,” Ken Dychtwald,
founder and chief executive of Age Wave, told Family Wealth Report.

Indeed, Merrill noted that many people share their worries surrounding
family matters and retirement, regardless of how much money they have. However,
in the firm’s Spotlight report, it found
that HNW individuals over the age of 50 are more than twice as likely than the
total population age 50+ to regard themselves as the “family bank” (47 per cent versus
21 per cent).

A big area of concern raised in the report is that, while many HNW
individuals provide substantial financial support to family members, some aren't open about important issues such as net worth, plans for living arrangements
in retirement, inheritance and long-term care. This, Merrill warned, could negatively impact their overall
financial security.

Among the general population, over half of those age 50+ have not had these discussions with their adult children while 28 per cent haven't even done so with their spouses. But - worryingly - even among the HNW, who, as Dychtwald said, often have a retinue of financial planners and accountants, there is a “surprising degree of silence.” A third of wealthy parents haven't discussed any of these topics with their adult children, and 12 per cent of wealthy couples haven't spoken with each other about them.

Avoiding negative outcomes

“We find lack of communication to be less about 'taboo' and more about wanting to avoid negative interactions or outcomes. For
example, a wealth creator might fear providing their children with information
about inheritances because knowing about that money could de-motivate young
people. On the flip-side, that same wealth creator might view discussions about
family finances or issues related to long-term care overly burdensome for
children to take on,” Stacy Allred,
wealth strategist for Merrill Lynch’s Private Banking & Investment Group,
told this publication.

“We find
that the highest concern of wealthy parents is that money conversations will
derail the motivation of their children. The irony is that by saying nothing,
you are sending the message that we don't talk about money in our family,” Allred
said.

“Considering the sometimes
substantial impact helping family members can have on financial plans, very few
proactively talk with family members about financial worries or how to prepare
for them,” Dychtwald added. “Instead,
most people wait for a crisis to surface and then there’s a lot of emotion-charged
catching up that’s needed.”

He also
noted that the financial services industry and related media haven’t been very
focused on how family challenges and needs might impact clients’ financial
priorities and worries later in life. 

The insights come as Spectrem's Millionaire Corner recently wrote about the concept of "affluenza" - a condition impacting young people from wealthy families who are growing up without an appreciation for money or a sense of responsible money management, it said.

They also highlight an opportunity for those in the business of managing people's wealth to remind parents and families of how important it is to be - at least to some extent - open about family wealth, including how it is being used and why. Additionally, it is a great way to engage the next gen - one of the hottest wealth management topics at the moment and, crucially, something that is increasingly sought after by wealthy families.