Sandwich Generation: 6 Money Messages for Your Parents and Kids

Boomers are making a lot of the same mistakes their parents made when it comes to discussing money with family. That is, they aren't doing it. But it's time to have the The Talk, with aging parents and grown kids. Here's how.

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Pretend that this sandwich represents your family.

The great transfer of wealth from parents to their baby boomer offspring was never going to live up to the rosiest projections approaching $40 trillion. In the wake of the Great Recession, assets to hand down are especially spare.

Still, something on the order of $10 trillion will change hands as the elder generation passes, and that is no trifle. AARP estimates that 20% of boomers have already received their family’s money; the median value of their inheritance was $64,000. By one estimate, the wealthiest boomers stand to collect $1.5 million, on average, while the bottom segment stands to collect an average of $27,000.

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Clearly, these are big enough numbers to plan around even though they generally are not big enough to fully fund a retirement. Yet in many cases, this “found” money lands in heirs’ laps with little discussion. They don’t know what to expect until they get it, and only then find that their finances could have been better arranged for tax and estate purposes.

Now boomers are beginning to make the same mistake with their children—not talking about the family’s money. Brian Sozzi, chief equities analyst at the financial content firm NBG Productions, says that 30% of boomers acknowledge that they have had no discussions about family money with their grown children.

Money can be a tough conversation—either with your aging parents or with your grown kids. But planners say communication about family assets and parent wishes is key to an eventual smooth transition at a time when nobody really wants to be focused on money. In a new report, mutual fund company T. Rowe Price offers tips for The Talk.

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With your grown kids, make sure they:

  • Know where to find important documents. These include your will, durable power of attorney, any trusts and insurance policies, and contact information for doctors, the accountant, financial adviser and lawyer.
  • Know what arrangements you’ve made for long-term care. If you do not have coverage, it will fall on your kids to assist you in later years, and they should know that.
  • Understand your financial strategy. Making your nest egg last is a challenge. You may have overlooked strategies that they know about, like delaying Social Security benefits and limiting your draw-down rate to 4% of retirement assets each year (with inflation adjustments.)

With your aging parents, you’ll want to get the information just described. But you should also:

  • Boost your emergency fund. You never know when you may have to travel or take some time off to care for your parents.
  • Talk now with siblings. Discuss who is best suited for roles like driving to the doctor, assisting with meals and cleaning, and managing the bills.
  • Meet with your parents’ financial adviser. This should be done with your parents’ blessing and in their presence. It’s the only way to really understand how much help they will need or how much you will ultimately inherit.