The Silent Generation comprises those born between 1922 and 1943 who are continuing to lead and/or contribute to organizations or may be contemplating re-entering the workforce. These older Americans hold three quarters of the nation’s wealth and are executive leaders of some of the most established and influential companies in America.
This group not only survived the Great Depression of the 1930’s but was instrumental in shaping the United States as an economic and military power. Patriotism, teamwork, and the idea of “doing more with less” define this generation. They are the keepers of our country’s past and founding goals and beliefs, and serve as the historians for those who succeed them.
Members of the Silent Generation face their own unique financial challenges. While most are fiscally conservative and were employed at a time when many people received lifetime pensions, they also share commonalities with the Baby Boomers: They value their lifestyle and independence and underestimate their longevity and its implications.
If you’re a member of the Silent Generation, here are four important questions to consider.
Will You Leave an Inheritance?
While one might assume that members of this generation would carefully budget for and leave an inheritance to beneficiaries, most retirees and pre-retirees believe leaving an inheritance to anyone but a spouse is relatively unimportant. The decision not to leave an inheritance would result in a greater financial comfort level, since you have more discretionary money to spend or give to heirs while you are living. However, I encourage you to discuss this issue with your spouse, your children, and your trusted advisors. One of the distinctive habits of the Silent Generation is that they often don’t freely discuss difficult issues. Resist that impulse here, because making the inheritance decision collaboratively will give you peace of mind and will promote family harmony.
Will You Outlive Your Money?
The more affluent half of the Silent Generation has done a solid job of saving for retirement, having built sizeable nest eggs. However, many pre-retirees and early retirees are overly optimistic about the size of their retirement income and often underestimate their retirement expenses. Most members carried out their savings in an environment of higher interest rates where 5 percent or better returns could easily be earned in low risk, fixed income investments. Those days are gone, at least for the foreseeable future.
Can You Afford Health Care?
Further complicating the financial challenge is the problem of rising health care costs. Many Silent Generation members underestimate what their health care expenditures will be during retirement. The high cost of long-term care must also be considered.
While many from this generation retired from corporations that provide health care benefits during retirement, many of those same companies have been forced by the Great Recession to scale back or eliminate those benefits. While the landscape is in flux with the approach of Obamacare, Social Security and Medicare benefits may well be reduced or higher premiums might be required for affluent retirees.
Are Both Spouses Informed About Family Finances?
Among many couples from this generation, one spouse is responsible for the family finances while the other is happily uninvolved. This arrangement breaks down, however, when the financially savvy spouse falls ill or passes away. If this is the dynamic in your own family, you need to think about who will oversee the finances when the spouse presently responsible is no longer up to the task. First, you should regularly review the family finances and investments, to bring the non-financial spouse up to speed. This is also a good time to consider hiring a professional to manage your investment portfolio and advise you on other wealth management issues. Many couples are unclear on vital financial issues, such as:
- What rate of return is needed on your investments to provide sufficient portfolio gains to maintain your current lifestyle?
- What is your present rate of portfolio withdrawals?
- Given that rate of withdrawals, how long is your retirement savings likely to last?
A wealth management professional can help you answer these questions, and see to it that you’re on a financially sustainable path.
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