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Retirement is complex because it represents a big change. In contrast to working years, a common goal is to make the most of time — a resource we don’t know how to use when we retire, because we are not used to having it in abundance — versus maximizing wealth. To further complicate matters, retirement isn’t just a single phase. It’s often thought of as three self-explanatory stages: the go-go years, the slow-go years and the no-go years.
In the go-go years, you will be active, healthy and your engagement with hobbies, friends and family will be paramount. The slow-go years start as your health begins declining and you find growing comfort in predictability and routines. This is where estate planning is typically cemented. In the no-go years, we rely on support, either from the community, the health-care system, family or all three.
Fortunate baby boomers will find themselves navigating these stages with more wealth than they will consume in their lifetimes. This means supporting family and charities enters the goal set in a meaningful way.
A common decision retired parents may face at this time is finding a balance between supporting children while keeping peace in the family. Many of my retired clients want to help their children get established in our unaffordable housing market and they find it surprising how carefully we have to navigate such discussions because children will view whatever you do subjectively. In my experience, what is equal isn’t always fair and what is fair isn’t always equal.
By the very nature of children being different — in age, interests, career choice — you have to consider treating them differently to provide bespoke support. However, that’s also the reason why they may feel they weren’t given the same advantages as their siblings.
A classic hypothetical example is a household with two children: the oldest child is a lawyer and the youngest child is an aspiring artist. Supporting the lawyer might entail contributing to expensive post-secondary schooling followed by down-payment gifting. For the aspiring artist, support might be allowing them time to get professional traction before they are ready to take on the commitment of a mortgage (the more time they take, the less affordable the housing market may get).
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It could be argued that it can be balanced out in the will, but they likely won’t see it that way. The subjective view of being treated unfairly can brew resentment. Even though it might even out in the end, the fact that one child received their support many years later is enough for the other to see it as unfair.
How do you broadcast this? Dialogue. Retired parents can be well served by explaining to their children that their intention is to support them equally and fairly. Simply acknowledging this is your goal and intention can go a long way in preserving family unity.
Another good approach is to consider including children in charitable-giving decisions. By empowering children with a voice and a vote in decisions that relate to family wealth, the playing field can be leveled in their otherwise subjective minds.
It can also help you get a better sense of the power dynamic between children and how they will arrive at decisions — by consensus, majority or divide and conquer. It may also give you a glimpse into how the debate might go over your estate.
The role of your wealth adviser is to guide you through this process and help navigate these uncharted stages of retirement so that you may benefit from the experience of approaches that work well. By clearly articulating your gifting and estate-planning goals, you may improve your journey and, hopefully, increase your odds of a legacy of family unity.
Ethan Astaneh is a wealth adviser and client relationship manager at Nicola Wealth Management Ltd. Nicola Wealth is registered as a portfolio manager, exempt market dealer, and investment fund manager with the required securities commissions.
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