These guys may be on the table next year

Retirees and others are digesting prolonged economic hardships, and like “Old Love,” it can be hard to spot. Two recent reports from Merrill Lynch pin down what many retirees experience in their own families.

“Americans’ Perspectives on New Retirement Realities and the Longevity Bonus,” published in May 2013, describes perceptions of retirement in light of our longer lives. The results are based on a national, online poll taken in December 2012 and January 2013, of people age 45 and older (45+). The survey had more than 6,300 respondents, and they oversampled wealthy people and 60 to 70 year olds.

• Over 70% of pre-retirees in the survey plan to work in retirement. Most hope for part-time or intermittent work. Only 29% say they won’t work for pay again.
• Coincidentally, the 50+ age group is the only one, based on U.S. Bureau of Labor Statistics, to have experienced an increase in the number of employed workers. All younger age classes have fewer people working.
• Among current retirees, 57% retired early, and the top three reasons were that they had health problems (34%), had enough money (27%), or lost their jobs (24%). The least common reason was needing to care for a family member (10%).
• Among those 45+, 52% expect to provide help to their adult children, but only 16% expect to give help to their parents or parents-in-law. Wealthier respondents expect to offer more help than poorer respondents.

A second Merrill-Lynch report, “Family & Retirement: The Elephant in the Room,” came out November 18, 2013, and it deals with the growing interdependencies in families, no doubt a product of the recession and poor recovery. This survey included 5,415 respondents age 25+. Again, they oversampled wealthy people.

• Over two-thirds (68%) of respondents age 50+ have provided support to family members in the last five years, and the average amount was almost $15,000 per year. The terms of the loans/gifts are usually lenient. The report doesn’t identify components of this support, but it most probably includes college expenses, which can be large.
• Often one family member serves as the family bank.
• About half of pre-retirees age 50+ would make major sacrifices, including working longer, returning to work, and sacrificing their lifestyle, to help family members.
• Divorce and remarriage have complicated the financial relationships of people 50+. About 37% now have step-relatives, and many respondents feel responsible for step-relatives.
• “Gray Divorce” is on the rise: in 1960 only 2% of the population age 50+ were divorced and single, but now it is 14%. Many divorced people remarry.
• Almost half of retirees say their marriages are more fulfilling and loving in retirement, while only 11% say theirs are more boring or contentious.
• The greatest worries of older people are running out of money and being a burden on family, which is consistent with the California study reported on two weeks ago.
• The vast majority (86%) of older people want to receive long-term care, if it’s needed, in their home.
• Small percents of respondents have in-depth, intergenerational discussions of family net worth (8-13%), long-term care (10%), inheritance plans (22-36%). Families find it hard to keep such discussions civil.

Readers must keep in mind that both surveys used the Internet to reach respondents. Wikipedia reports that almost one-third of Americans are not connected to the Internet. They tend to be recent immigrants, African Americans or foreign-born Latinos, and among all groups, older, poorer or less educated.

Maybe the common threads are: first, many Americans have been affected by the recession and slow recovery. Depending on their age and wealth, Americans expect to work and have worked longer, and expect to help and have helped family members. They experience increasing divorce rates and consequently more complex families, and many of those already retired had to retire early for health reasons or because they lost their jobs.

The most severe weakness is that families find it hard to openly discuss and plan around their changed circumstances. It’s as if family members believe theirs is the only family affected, and the members are embarrassed and unwilling to talk dispassionately about it.

Second, and in response, Americans are experiencing increasing family interdependence, relying on members who have more wealth or income. These members are willing to help, even at considerable sacrifice to themselves and without imposting strict conditions, yet they worry about running out of money and health, and whether they can avoid long-term institutional care.

This apparent generosity and resilience of American families is something for which we can give thanks. Happy Thanksgiving.