Explainers

Imagine that you’re living in a tent on an open plain.

One day you plant a tree. For the next 40 years, you water it. You protect it from harsh weather and animals. You never pick its fruit. You don’t climb it for fun. You don’t take a break and rest in its shade. You don’t even cut down some branches to build a house. You never go anywhere or do anything else because you’re focused solely on growing that tree bigger and bigger.

Finally, one day, just after your 65^th birthday, the tree stops growing.

You look up at its enormous trunk and wide spread of branches and say to yourself …

“What was that for?”

Many of us treat our financial planning in a similar fashion. We become so caught up in the work that goes into “growing the tree” that we never think about harvesting the apples or timber to make a better life for ourselves. As long as our tree keeps getting bigger, we keep putting in the work of growing it, even if that work doesn’t engage our interests or put our unique talents to their highest purposes.

Then retirement rolls around.

Faced with the prospect of no longer working, some soon-to-be-retirees feel lost. Their sense of purpose was so connected to working hard to make more money that they never stopped to ask themselves what that next pound was really for.

Some of these people push off retirement as long as they physically can to keep chasing after more money that they don’t really need and will never actually spend.

Others become so concerned about running out of money that they live too conservatively and never enjoy their retirement.

And others potter aimlessly around the house re-arranging the furniture for the 10^th time.

A better sense of purpose.

There is a purpose to having money and growing your wealth. But what money can’t do is create purpose in and of itself.

Because eventually, your tree is going to stop growing. You’ll be able to live comfortably off the money you’ve saved and the income that your investments will continue to generate. After a lifetime of working hard and following your financial plan, your return on investment will be financial security in retirement.

That’s when it’s time to stop worrying about the tree and start harvesting.

That’s when it’s time to stop focusing on your return on investment and start enjoying a better Return on Life.

But here’s the thing—the earlier you’re able to make this shift into a ROL mindset, the sooner you’ll be able to live the best life possible with the money you have. Don’t wait until you’re 65 to start harvesting that tree and enjoying life. You can trim that tree a bit each year, enjoy life today, while still growing it for the future.

Enjoying life along the way will make your eventual transition to retirement even easier. Instead of struggling to replace work with leisure, you’ll be ready to pour even more of your time and energy into the activities that really matter to you.

Start by asking yourself, “What is my money really for?”

Is it for going on dream holidays with your spouse? Is it for taking classes that enrich your mind and body? A second house in the country for weekend getaways? As much golf or tennis as you can squeeze into a day? The freedom to volunteer your time and professional expertise at an organisation that’s making your community better? Finishing a major home renovation you’ve been putting off? Seed money to grow your own business?

Your life will take on a brilliant luster when you start to use your means in a meaningful way. Let’s talk about the interactive tools and exercises we use to help people like you find that meaning and put their lives at the center of the financial planning process.

The holiday season might not seem like an ideal time to have a serious conversation with your immediate family. All that shopping, decorating, cooking, and celebrating can be time-consuming and stressful enough. But if you’re nearing retirement age and your children are becoming more independent, the holidays might be your best shot at getting everyone to sit down, open up, and plan for the year ahead.

Besides, a family financial meeting doesn’t have to be an all-day event. After dinner, pour some coffee, pass around a plate of cookies, and talk about these three important topics. The holiday atmosphere might just set the perfect mood for a positive and productive discussion.

1. Clarify everyone’s goals for the year ahead.

One reason that money can be such a contentious topic is that families don’t often discuss their financial goals. That can lead to misaligned expectations and resentment.

So, go around the table and ask your family members what they want to accomplish in the year ahead. What are some individual financial goals? Even if your children are independent, openly discussing goals together can create an added level of encouragement and accountability. If your son knows mum and dad might ask how saving up for that mortgage is going, there’s a better chance he’s going to ramp up his savings and hit that goal.

Then, what are some things the family can pitch in on together? Is it finally time for everyone to invest in that summer cottage? Should you stop putting off that dream Caribbean cruise? Is there a favourite charity or cause you want to start donating to in a more impactful way?

2. Review the family budget.

Parents are only obliged to share as much financial information with their children as they are comfortable sharing. However, every member of your family who benefits from things like club memberships, mobile phone plans, video subscriptions, or shared vehicles should be aware of the costs. If your children are old enough to be working, they’re old enough to be contributing. And if they’re old enough to be on their own, it’s probably time for them to get their own plans.

You also might discover that no one is reading those magazines piled up on the coffee table or going to the gym. Are you getting enough use out of the things you’re paying for every month?

You and your partner can review more personal budget items in private, like your grocery bills, health care premiums, or insurance on that second car neither of you are driving anymore. But If you’re thinking of a major cost reduction, such as selling the family home and downsizing, broach that subject with your family well in advance to minimise potential shock or hurt feelings.

3. Discuss your estate plan.

There’s never an ideal time to discuss your estate plan. No one likes thinking or talking about what’s going to happen after we’re gone. But your loved ones need to have a broad idea of how you want your estate to be settled should something unexpected happen.

You don’t have to delve into every little detail of who gets what. At the minimum, explain to your family whom you’ve designated as your executor, where all your important documents are filed, how you want to be cared for if you become incapacitated, and whom they should call at your financial advisor’s office if you pass.

Your adult children should share their own big picture estate details as well. And if they haven’t drawn up a will or health care directives, hopefully this conversation will encourage them to do so.

As your parents begin to settle into their final phase of life, their health, residence, and finances could become a factor in your retirement planning. This is especially true if you are the person your parents have tasked with settling their estates.

There’s no simple way to tackle all the logistical and emotional challenges associated with caring for an aging parent. But these five steps will help you get the help you’ll need to make sure your parent is safe, cared for, and financially secure.

1. Call a family meeting.

No two families are the same, but in most cases, you’re going to want to gather together all siblings and close family members for an open and honest discussion. If your parent is dealing with a serious and potentially debilitating health issue, don’t sugar-coat the truth. Hiding the facts now will only lead to hurt feelings, resentment, and poor planning.

Depending on the parent’s condition, you might consider dividing up a caregiving or visitation schedule. Even pitching in on small day-to-day tasks like helping mum or dad buy groceries can be a big help.

If you’re contemplating a more serious decision, like assisted living, make sure you give everyone space to voice an opinion. Try to keep the conversation as positive and solution-focused as possible. Employing a mediator or family counselor to facilitate might be a good option if you’re concerned old family issues could boil over and prevent a solid resolution.

2. Don’t try to parent.

Shifting from the role of adult child to caregiver is going to be a difficult Parents who feel like they’re being “babied” are prone to depression or dangerous outbursts of independence, like grabbing the car keys or refusing to take medication.

A better approach is to try to frame your caregiving as a way of being more involved in your parent’s current routine. Take a seat at dad’s weekly card game. Put the grandkids’ sports and performance events on the calendar and offer transportation. Bring an extra dish to a dinner party. Drive mum to the movies … and let a sibling know the house will be unoccupied for a few hours if there are any cleaning or hoarding issues that need attention.

3. Gather the essentials.

If your parent doesn’t keep all important documents in one location, now is the time to collect, copy, and file things like:

• Identification (driver’s license, passport, birth certificate, marriage certificate, etc.)
• Bank records
• Home deeds and vehicle registrations
• Insurance records
• Investment and retirement account records
• Wills and trusts
• Power of Attorney
• End of life directives
• Login information for important online accounts (banking, subscriptions, social media)

There may be other documents that are unique to your parent’s living or financial situation. We can help you make a comprehensive list.

4. Tag along.

Start attending doctor’s appointments. Don’t be afraid to ask questions that will help you familiarise yourself with your parent’s medical condition and aid with any at-home care like prescription drugs.

Also ask your parent to introduce you to his or her financial adviser and attorney. Make sure the relevant professionals have all important information about changes to your parent’s health, mental capacity, or living situation.

5. Plan for the next steps.

At some point, your aging parent may no longer be self-sufficient. The earlier that you and your close family members decide upon an action plan, the better. Do you or anyone in your family have the room, the time, and the means to take in your parent? How can non-caregiving siblings or other family members chip in on associated costs of living?

In many cases an assisted living facility is a more realistic option. But be aware that your parent’s resources may not cover those costs. If your parent does not have retirement funds earmarked for end-of-life care, you and your close family members may need to hold another meeting to discuss how to pay for a facility.

None of these steps are easy, and none of the associated options your family settles on will be perfect. The sooner consider how caring for an aging parent might affect your financial picture, the sooner we can get to work on the money side so that you can concentrate on giving your family the love and support it needs during this difficult time.