The Role of Families in Lifetime Financial Security

Some who step up to help family members when needed will have adequate resources, creating no impact on their retirement security, but for some others, family help may drain their resources and leave them in a worse or difficult situation for retirement.

For many Americans, the extended family plays the role of sharing risk, supplementing savings and formal risk management. For other Americans, there are few or no family members available to help.

Family is an important part of our personal financial planning and financial wellness plan.

Key questions include:

  • What do retirees expect from their family in retirement, and vice versa?
  • What level of support do retired family members expect to give loved ones, and vice versa?
  • How do you prepare retirees and their loved ones for financial shocks during retirement?

Existing research leaves us valuable information, but also unanswered questions, so there is a need for further research. Here’s what we know:

What seniors want and expect  

In 2015, the Society of Actuaries (SOA) conducted focus groups[1] with retirees who had been retired 15 years or more.  Most retirees said they did not want to rely on their children for support but others saw children as possible support and a resource to fall back on. However, a major topic of the focus groups was shocks and unexpected expenses, including children needing financial help. Other studies indicate seniors are providing more financial help to children.

Families also play important roles in caregiving, but the cost to the caregiver may be overlooked.  One study estimated that the individual who provides caregiving for aging parents loses a lifetime average of more than $300,000 in wages, retirement benefits and Social Security benefits.[2] 

What Americans say about family and retirement  

The New American Family study[3], sponsored by the MetLife Mature Market Institute in partnership with the Society of Actuaries, documented the sense of responsibility Americans feel for aiding family members who need help.  This study surveyed adults ages 45 to 80 and focused on understanding whether there were differences by family type.  It found that half of the respondents with adult children have provided them with financial assistance, and one-fourth of respondents expect children to help retired parents in need.

[1] Post-Retirement Experiences of People Retired 15 Years or More, Society of Actuaries, 2016,

[2] Timmerman, Sandra and Anna M. Rappaport, Often Overlooked Issues in Retirement Planning – How Family Caregiving and Living Arrangements Relate to Long Term Care.  Retirement Management Journal, Summer 2016, Vol. 6, No. 1, published by the Retire Income Industry Association

[3] The MetLife Study of Family Structure and Financial Well Being, 2012,

Merrill Lynch, in partnership with Age Wave, conducted a survey[1] of the link between retirement and family issues.  They found strong links and introduced the idea of a “family bank,” defined as the household that family members most often turn to for help. Fifty-six percent of respondents ages 50 and older believe there is a “family bank” in their family.  The study indicated that 62% of the 50 and older respondents are providing financial assistance to family members either one-time, on-going or something in-between. 

This study shows that among respondents ages 50 and older who provided money to family members in the last five years, recipients were:

            Adult Children (21+)      68%

            Grandchildren                26%

            Parents/in-laws              16%

            Siblings                          13%

            Other relatives               14%


Note that some families are helping people in more than one group.  The families providing such support are generally not factoring it into their retirement plans, and therefore may be underestimating their retirement spending requirements.

The age 50 and older respondents indicated they would be willing to make “retirement sacrifices” to financially support family members.  Sixty percent indicated they would be willing to retire later/work longer, 40% would be willing to work after retirement, and 36% would be willing to have a less comfortable lifestyle in retirement.

The study also indicates that 88% have not budgeted for providing financial support to others and 91% have not prepared for caring for an aging parent or relative.

SOA post-retirement risk research is generally compatible with these findings and consistently shows that many people do not plan for the longer-term.  When considering these results together, it seems likely that, in many cases, the implications of potential future family support are not carefully considered.

Consequences of failure to adequately consider family situations 

Many, but not all, people will step up to help family members when needed.  While some may plan to do this, help is often provided without pre-planning. Of the families who have become the “family bank,” some will have adequate resources, creating no particular impact on their retirement security.  But for many others, family help may drain their resources and leave them in a worse or difficult situation for retirement.  This is potentially a huge problem for people who are involved in long-term caregiving requiring them to give up a job or reduce hours, and for people involved in long-term family support.

A family analysis  

A family analysis should include a listing of parents, siblings and children (and maybe others), together with some evaluation of who might be able to help and might request help, with any notes about potential magnitude.  Help can be with management of medical care, shopping, errands, household chores, household management, hands on care, financial management, and/or financial help.

[1] Family & Retirement: The Elephant in the Room, 2013, Bank of America Corporation,


Over people’s lives, help from family members can be an important source of support.  Data from several sources indicates that many more older adults provide financial help to younger members of the family than vice-versa.  People without families need some of the help that family members offer, and have the challenge of finding help elsewhere.

Planning for retirement usually does not take into account the potential for family help across generations.  Nor does it take into account the added challenges for those without family.  Financial wellness programs should help people understand and focus on issues of importance, and give them information to help them address these issues.  I recommend providing information on family as part of such programs as well as information about considering other support. These issues have become increasingly important as employers have reduced their support for employees.  Communication between family members is critical to success, and financial wellness programs can stress that issue.


- Anna Rappaport, FSA, MAAA, Anna Rappaport Consulting