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Talking About Family Finances This Holiday Season

Talking About Family Finances This Holiday Season

Al Waller: Happy Holidays!! It’s hard to believe they’re finally here. After nearly three long years of the pandemic, many families will be reuniting, some for the first time since 2019. With this, comes a time for celebration, family, friends, and food.

A lot of things come to mind when we think about holiday festivities. And my strong hunch is that for many people, discussions about personal finances are not on the list.

Welcome back to Clearpath – Your Roadmap to Health and WealthSM. I’m your host, Al Waller. Joining me is Catherine Collinson, founding CEO and president of nonprofit Transamerica Institute® and its Transamerica Center for Retirement Studies to share how the holidays might just be a prudent, if not an ideal time, to touch bases on financial plans.

Before we get started – a reminder that we would love to hear from you and learn what topics you would like us to cover or give us feedback on this episode. Please drop me or Catherine a note at [email protected].

Catherine, I’m keen on hearing your perspectives on the importance of financial conversations. Speaking for myself, I suspect our listeners might find these topics to be a little awkward to the point of being downright uncomfortable, so your insights are very welcome.

Catherine Collinson: Thanks, Al. The holidays are one of the few times of the year where families are gathered together in person. Even though it might feel a little awkward or uncomfortable…because everybody's together, it’s an ideal time for having candid conversations about finances and long-term planning.

These types of conversations are relatively uncommon. According to a Transamerica Institute survey conducted in late 2021, fewer than one in five Americans – only 18 percent – indicate they frequently discuss saving, investing, and retirement planning with family and close friends. Thirty-one percent say they “never” discuss it.

Moreover, these conversations are especially important now, given the extent to which people have been financially impacted by the pandemic. Our survey found that almost one in four Americans – 24 percent – indicate their financial situation worsened in light of the pandemic.

With the ongoing disruptions in the employment market, volatility in the financial markets, increasing interest rates, and skyrocketing inflation, many more people may find their financial situation worsening.

Al Waller: I hear you, Catherine, but with so many things to celebrate and festive things planned, I’m not sure when or how most of us would be able to nuance finances into the conversation. To me, it sounds like a recipe for indigestion.

Catherine Collinson: Al, it doesn’t need to overtake all your fun plans – and it doesn’t even need to take long. You could plan for a short conversation for the commercial break during a Ravens game or a slightly longer conversation while the turkey or pot roast is cooking. Importantly, you should set a time limit for the conversation. If it's going to be a 10-minute conversation or a 20-minute conversation, set that time limit and promise your family that the festivities will resume at the conclusion of the conversation.

Al Waller: Well, Catherine, I think you are right on point in terms of setting perimeters up front, for instance, when to discuss and the time allocation. Beyond that, how would you suggest getting the ball rolling with this type of discussion?

Catherine Collinson: Al, assuming you would be the one initiating the conversation with your family, it does require some preparation. If handled with care, the discussion can be empowering and supportive.

Here are my tips for getting started:

Start by envisioning a positive outcome to increase the likelihood of success – if you envision a food fight and hard feelings, you might inadvertently manifest them.

Create a short checklist of topics for the conversation. I underscore a short list, so it doesn’t become overwhelming.

During the conversation, listen to everyone and set your ego aside – keeping in mind that the goal is a positive outcome.

Al Waller: I think active listening is absolutely key and makes a lot of sense because no one wants bedlam to erupt at their dinner table. So then, what sort of items and approach should we be pursuing here?

Catherine Collinson: An ice breaker is to check in with everyone to learn if they’re doing all right financially – or having problems. If everyone is doing fine, then that’s fantastic news. If not, depending on the problems involved, families can brainstorm ways to help each other out and find solutions. For most of us, our best support system is our family. Often, we have more resources available than we might realize.

It's also important to remember, the sooner problems can be raised and addressed, the less likely they are to spiral out of control. And it’s much more harmonious to proactively raise problems than wait until a crisis occurs when reaction times are short and emotions are high.

Al Waller: I see where you're heading, and while this sounds easier said than done, I'm actually getting more comfortable with the concept. Now, what would you suggest should be covered?

Catherine Collinson: Another topic is to remind everyone where the family’s legal documents are stored – a power of attorney, durable health care power of attorney, last will and testament, revocable trust, and any others.

People tend to put these documents in a safe place – and people remember they’re in a safe place. However, at a much later date, they might not remember the exact location of that safe place.

Al - please don’t answer this on the podcast – but do you know where your legal documents stored? And would your family know where to find them?

Al Waller: Yes, as a matter of fact, they do! A good point and well-taken. I actually remember not long after my folks passed away, we had an extended trip planned out of the country.

With that pending event, I set up an inventory of all essential documents: will, investments, insurance policy documents, as well as a central location for them to be stored. Then I arranged to sit down with both of my sons when they were in town in the event that a tragedy occurred because I really just wanted to hit on that to make sure “all hands on deck” and everybody understood the game plan.

But I can tell you, I remember my wife, Edie, thinking I was just getting a little too morbid with my fixation on this, but I figured, if you make these kinds of arrangements upfront, you're covered and it's sort of like carrying an umbrella – you don't have to worry about it.

Let's just say you don't have any legal documents, then what?

Catherine Collinson: It sounds like you have done a fantastic job. However, for our listeners, if your family doesn’t have legal documents, then another topic of conversation is to make a New Year’s goal or resolution to establish them, keeping in mind that it requires doing homework, long conversations, and involves working with a family attorney or other legal service provider.

And, by the way, if your family doesn’t have legal documents yet, you are not alone. Our survey found that only seven in 10 retirees (70 percent) have one or more legal documents in place, the most common being a last will and testament at 52 percent. Fewer than half of retirees have a health care power of attorney (41 percent), an advance directive or living will (38 percent), or financial power of attorney (36 percent). Even fewer have a trust or other types of legal documents.

Al Waller: Again, these are all prudent points you are making. Do you have any other topics for a family conversation?

Catherine Collinson: If you have parents or grandparents who are growing older and may need care at some point, you should consider checking in with them if they’ve thought about their plans for receiving care. Our survey found almost half of retirees – 48 percent – plan to rely on family and friends. A big question is: Have they shared that expectation with their family and friends? Our survey didn’t ask about this, but there’s a strong chance that the answer may be, “No.”

Al, these conversations are so important for family members who may need care – and they are just as important for family members who could be the caregiver. Our survey of workers found that almost four in 10 workers – 38 percent – are currently serving as a caregiver or have served as a caregiver in the past. In doing so, the vast majority made some sort of adjustment to their employment that could negatively impact their paycheck and ability to save for their own future retirement.

So, if a family hasn’t started having these conversations, it’s a good time to delicately initiate them, knowing these are discussions that will take place over time, and they will require a lot of reflection, as well as planning.

Al Waller: I think you hit the nail right on the head – tactfulness and sensitivity are really just vital in these types of conversations. And thank you for underscoring this point about aging parents and the family caregivers, who are performing an invaluable unpaid labor of love.

For our listeners out there, we recently dedicated an episode of ClearPath – Your Roadmap to Health and Wealth to Supporting Caregivers in the Workplace, which outlines the experience of family caregivers and the ways that their employers are supporting them.

Catherine, you’ve given our listeners some substantial food for thought when they get together with their families over the holidays. As we wrap up, where our listeners can go to learn more?

Catherine Collinson: I’d like to share four resources that I find to be particularly helpful, including:

For our listeners, you can find a transcript of this podcast with hyperlinks to these resources at the ClearPath – Your Roadmap to Health and Wealth section of WYPR’s website.

Al Waller: As always, Catherine, thanks so for sharing your team’s research and expertise. This was extremely insightful.

For our listeners, if you have ideas for future episodes, comments, or feedback, please email me or Catherine at [email protected]. Don’t forget to subscribe to our podcast so you don’t miss upcoming episodes.

I’m your host Al Waller. Happy Holidays. We wish all of you the best of everything this holiday season and in the coming new year. Until the next time, stay safe, be well and thanks for listening.

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about health and wellness, employment, financial literacy, longevity, and retirement. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org/podcast.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Catherine Collinson is the founding president and CEO of nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies, and she is a champion for Americans who are at risk of not achieving a financially secure retirement. With two decades of retirement industry-related experience, Catherine is a nationally recognized voice on workforce, aging, and retirement trends. She was named a 2018 Influencer in Aging by PBS’ Next Avenue. In 2016, she was honored with a Hero Award from Women’s Institute for a Secure Retirement (WISER) for her tireless efforts in helping improve retirement security among women.