Retirement: It's a family affair

The consequences of your retirement planning decisions often ripple out beyond just yourself and your spouse or partner, and these consequences can significantly impact your extended family and close friends in both positive and negative ways.

A report issued by Merrill Lynch, in collaboration with Age Wave, titled Family and Retirement: The Elephant in the Room, looked at this and other issues tied to retirement. The report found that while retirement planning should be a family affair, often it is not. Many people don't discuss their retirement plans with family members, an omission that can have unfortunate results.

Here are some of the report's key findings.

• As people age, "being a burden on family" and "running out of money" become their top concerns.

• 62 percent of Americans age 50 and older have provided financial support to family members during the past five years; most have not factored this support into their retirement plans.

• 56 percent of people age 50 and older would prefer to begin passing on their assets while they're living rather than at the end of life.

• 37 percent of people age 50 and older believe they'll need long-term care. The truth is, most likely twice that number will eventually need this care.

• Have a realistic plan for generating a lifetime retirement income that covers your living expenses, including thoughtful strategies for claiming Social Security benefits and deploying your retirement savings to generate retirement income. Many people don't realize how much money it takes to be retired for decades. Once they have a realistic picture, they often take healthy steps to improve their financial security, including working longer, saving more, and reducing their living expenses.

• Have a plan for addressing the threat of long-term care expenses. Many boomers -- including my wife and me -- now find we have to address this issue where our parents are concerned. "I'll deal with this later" might be a common reaction, but it's not a good strategy. One way to minimize the potential burden you may place on your children is to get serious about taking care of your health, in order to reduce the odds of eventually needing care. Also, take steps now to be able to pay for long-term care in case you need it. Such steps could include buying long-term care insurance, holding your home equity in reserve and not tapping it with a reverse mortgage or home equity loan, and setting aside a dedicated investment account that won't be tapped for ordinary living expenses. If you take these steps and wind up not needing long-term care, then the home equity and/or dedicated investment account can fund a legacy when you pass away.

• Realize that you can leave a meaningful legacy to family and friends that goes well beyond money. The gift of your time and life experience is often more valuable than money, particularly at key transition or crisis points in the lives of your loved ones.

• Give away some of your treasures and memorabilia while you're alive, so you can see how they're enjoyed. Often adult children and grandchildren value the family heirlooms as much or more than financial gifts. This suggestion might be particularly appropriate if you decide to downsize your home to reduce your living expenses.

The full Merrill Lynch/Age Wave report contains a wealth of information and ideas, including insights on providing the appropriate ground rules and boundaries in providing support to family members, the unique challenges of blended families and divorce, ideas for connecting with grandchildren, and the payoff to having proactive planning and discussion sessions with family members. It's important to note that those who've had financial discussions with their spouses or adult children are almost twice as likely to say they'd be well prepared if they were to face family challenges.