Have you always been seen as the “responsible one” in your family? Did you save and invest responsibility through your 30s, 40s, and 50s, and now your grown children and other relatives are coming to you for money? A study by Merrill Lynch in partnership with Age Wave reveals that three out of five people believe a member of their family who is over 50 is the “Family Bank,” meaning someone they turn to for financial help.
If “Family Bank” describes you, how do you feel about helping family members with their finances? The study cited above reveals that 54% of people age 50+ who had given a family member money in the last five years felt appreciated, 36% felt generous, 24% felt proud, 18% felt taken advantage of, and 7% believed they would likely suffer for having given away their money. Likely, the type of feelings experienced was largely dependent on the quality of the relationship as well as the reasons for and frequency of the requests.
Money is powerful and its impact on our decisions can become even more challenging later in life. There are so many emotional questions, such as will my money run out before my years? Will my children care for me later if I don’t give them the money they need now? What kind of memories will my family hold of me based on how I used my money? Why not give away my inheritance now instead of when I’m gone?
Unfortunately, being overly generous with your retirement nest egg may create a future burden for your family members. The most recent National Retirement Risk Index published in 2014 shows that 52% of working-age households are at risk of being unable to maintain their standard of living in retirement. As baby boomers age, this situation has become more serious over time, but many late-age workers do not know they are facing financial crisis, or don’t want to face this reality. A brief released by the Center for Retirement Research at Boston College reveals that despite the lack of financial knowledge, nearly three out of five households have a “good gut sense” that they will be financially secure in retirement.
So, if you serve the family as a go-to bank, you may want to do to a reality check of your financial situation, and then determine if giving away your financial security is really the most loving thing to do.