Why Not Turn the Tables?

Thoughtful marketers have noticed that grandparents love to give to their grandchildren, but here's an example of a massive opportunity that's hiding in plain sight. Why not activate the marketplace for grandparents as the recipients of generosity? With those 70 million grandparents in the United States and over a billion worldwide, and with the average grandparent having 4+ grandchildren, why is “Grandparents Day” such a snooze? You may not even know when it is. Hardly anyone does. Since it was established in the United States in 1978, some two dozen countries around the world celebrate Grandparents Day in some form. But the emphasis is on honoring grandparents' contributions, not generosity toward them, and the day isn't a big deal anywhere.

There's four billion grandparent cards waiting to be bought. But let's imagine more than that. What kinds of running shoes might Grandma like? Which new books would Grandpa like to read? And if you can afford it, does he need new golf clubs? Would Grandma like a ticket to Las Vegas? Just as brilliant Chinese entrepreneur Jack Ma hit the bullseye when his Alibaba retail platform promoted “Singles Day,” which swiftly became the biggest and most lucrative annual selling event in the world, there must be a massive grandparent market waiting to be envisioned and unleashed around the world.

The Family Bank: Open 24/7

One of the biggest financial – and often emotional – complications in retirement comes from serving as what we've termed the “family bank” and lending, or more often simply giving, money to family members. The web of family interdependencies can keep the bank open 24/7. The family bank may help meet a one-time need such as an extraordinary medical expense, or it could provide ongoing everyday assistance over the course of many years. The most common recipients are adult children, but others include parents or in-laws, grandchildren, and other relatives. Six in ten Americans over age 50 we surveyed have provided financial support to family members in the last five years. Among those who have given or loaned money in the last year, the average amount is $6,500.¹⁷ Globally, HSBC reports that 50% of parents provide regular financial support to their children over 18, and 54% provide support to their parents.¹⁸

Why do people nearing or even in retirement take on the role of family bank? Generational generosity, whether they can afford it or not. Eight in ten told us, “It's the right thing to do.” And half say they felt an obligation.¹⁹ Unlike regular banks, in the family bank the money is typically provided without expectation of repayment. About a third of the time, the banker provides funds without even knowing how they will be used.

Who serves as the family bank? Sometimes the role is predetermined, as when parents support their adult children. But beyond that, family members turn to the person who seems to have the most money, who seems most financially responsible, or who seems most approachable. More than half of those surveyed said they can name the family member who serves as the bank. Being the fiscally responsible and approachable one can backfire.

A surprising number of retirees provide financial support to their adult children. Those who delayed having children or had children in second marriages are increasingly likely to have early adults on the family bank books. And those early adults are taking longer to establish their own financial footing. Seven in ten early adults received financial support from their parents – who are usually in their 50s or 60s – in the last year, and half of them continue to receive support into their early thirties. While most of the financial support is for everyday expenses such as cellphone plans, groceries, rent, health insurance, and automobiles, some parents provide help with big-ticket items like down payments on houses. The total is enormous. The aggregate annual amount spent by all parents on early adult children is over $500 billion – or twice what they put into their retirement accounts. And while we hear a lot about the strain on young people to pay down their college debt, for many it's their parents or grandparents who are footing the bill. Educational expenses for adult children account for one-fourth of that $500 billion.

Some retirement age family bankers feel cornered. One told us, “I thought I would be supplementing my grandchildren's college funds. It turns out I was the college fund.” Another said, “I paid down my mortgage and didn't run up my credit cards. Now everyone in my family is turning to me for money.” Overall, however, generosity prevails: “I'm not looking to get back the money I loaned my daughter. I'm just happy I could help her when she needed it.” But generosity can backfire in a big way when people sacrifice their own retirement savings and financial security to support family members. And it can backfire down the road when today's generosity means being strapped tomorrow, perhaps to the point of needing help in return and becoming a burden on family members, something that people from all walks of life tell us they dread.

Few retirees or pre-retirees anticipate and plan for providing financial support to family members. Nine in ten have never budgeted for such support, including the easily anticipated need to assist aging parents. So support is given without careful consideration of what they can really afford and how much they may be compromising their own retirement finances. An underlying problem is lack of discussion, hence clarity of terms, between giver and recipient. In retrospect, the family bankers often wish they'd established clearer expectations and limits, especially with adult children. And that there were ways to educate family members on how to be more financially independent.

Gray Divorce

People today feel greater permission to move on if relationships aren't working out. Consequently, increasing numbers of retirement-aged couples and their families are disrupted by divorce. In fact, between 1990 and 2015, the rate of “gray divorce” (among those 50 and older) doubled, and among those 65 and older it has tripled.²⁰ Over 30% of Boomers have been divorced at least once, and among the oldest Boomers, born before 1952, it's 37%.²¹ “The Baby Boom generation was responsible for the extraordinary rise in marital instability after 1970,” say Sheela Kennedy and Stephen Ruggles in their study, “Breaking up is hard to count.” What's behind the instability? “The loosening of legal constraints and declining social stigma has reduced barriers to divorce, and the opening of new economic opportunities for women allowed many to escape bad marriages.”

Gray divorce complicates retirement, both personally and financially. After a divorce, networks of friends shrink, especially for men. And financial assets shrink, especially for women. The average gray divorced woman experiences a 40% decline in household assets.²² And there's less time to catch up, as Susan Brown of Bowling Green State University explains: “You're on the downslope of your career, so your ability to recoup any financial losses are lower compared to if you get divorced at age 35, when you've still got a good 30 more years potentially in the labor force.”²³

While divorce is among the most stressful life events, it comes as a relief for some. And while most people try to keep matters private and quiet in a divorce, others benefit from making the event a bigger deal. And there's a market in that. Christine Gallagher, author of The Divorce Party Handbook, has organized more than 200 such parties. The playful celebrations can include cathartic rituals – tossing the wedding ring into the ocean or burning the bridal veil – or fun and games mocking the ex. The divorce party supplies site named “Unknotted” offers “I Don't” cake toppers.

***

In the remainder of this chapter we explore in depth two more family challenges, two common situations where lives are stressed and families rally in support: when retirees serve as family caregivers and when they are widowed. Both can be anticipated but not completely prepared for. And both offer occasions for attentive and empathetic organizations to grow their business while serving and deepening relationships with retiree customers.

The Variety of Caregiving Responsibilities

Caregiving can begin suddenly when the recipient suffers a setback like a fall. Or it can increase gradually from occasional help to daily assistance to continual care. The duration can be brief – the recipient who fell had a hip replacement and recovered nicely. Or indefinite if the recipient has a gradual debilitating condition like Alzheimer's. Care most often takes place in the recipient's home, and 14% of the time the caregiver lives there as well, but one-third of the time the recipient moves into the caregiver's home.²⁹

The caregiving process depends on the recipient's mental and physical condition and trajectory. As the recipient's needs increase or communication capability declines, caregiving can become more physically difficult and emotionally stressful. Yet most family caregivers let the load increase without getting additional support, and social isolation can become a problem for caregivers. Another big variable is the relationship between caregiver and recipient. Caring for a parent usually involves more of a role reversal than caring for a spouse.

Caregiving can include a variety of services (Figure 7.2). We may think first of physical care – help with eating, bathing, dressing, toileting, getting around. But the heart of caregiving can be emotional and social support, including companionship, conversation, everyday leisure activities, and transporting the care recipient to see friends. A recipient who does not need much personal care may still need household support, like cooking, cleaning, shopping, or medical support, such as managing medications and appointments and performing some basic nursing procedures.

Another important role is care coordination, organizing and monitoring the activities of the caregiving team. With that much potential work to do, many families make caregiving a group endeavor, where one person serves as primary caregiver and usually coordinator, and other family members fill in on a regularly scheduled or as-needed basis. As we'll discuss in more detail in Chapter 8, paid professional caregivers are part of the team in about one-quarter of caregiving situations, most often to help older recipients with physical care.³⁰

Family caregiving is the most common situation. But what happens if no family is around? The emerging and expanding “share the care” model organizes local volunteers to collectively provide care and serve as the recipient's extended “family.” When we talked with Michael Adams, a Stanford-trained lawyer and CEO of SAGE, the advocacy and services organization for LGBTQ older adults, he explained, “Because many LGBTQ people don't have adult children, they can't expect built-in care from family or family caregivers as they get older. Many are recognizing that at some point, they may well need community support and care. Some people I know are thinking about and exploring ways of creating their own kind of Share the Care communities.” SAGE research finds that 30% of older LGBTQ people are very or extremely concerned about not having someone to take care of them, and 32% are just as concerned about being lonely and growing old alone. Among older heterosexual, cisgender people, less than 20% share those fears.³¹ This creates both challenges and opportunities to serve the LGBTQ community.

Financial Caregiving

Caregiving is an intensely personal commitment. It can also be a major financial one. Our studies have revealed that over 90% of caregivers are also financial caregivers, contributing money directly or performing financial coordination tasks on behalf of the care recipient (Figure 7.3). Nearly two-thirds of caregivers do both.

Those making direct financial contributions average $7,000 a year.³² The money usually pays for a mix of personal, medical, and general living expenses, with the biggest categories household (41% of the total) and medical expenses (25%). But out-of-pocket expenses can be a lot higher, especially when caring for someone with dementia. Three in ten family caregivers who contribute financially say it causes them financial difficulty.³³ But the majority aren't tracking and don't even know how much they are spending, especially for background expenses like their own transportation.

Financial caregivers also pay bills and manage bank and credit card accounts, and they commonly handle insurance policies, prepare taxes, and manage investments. They should also be a major line of defense against elder financial abuse, starting with monitoring accounts of all kinds. As a recipient's condition declines, these responsibilities expand. The financial caregiver may play an ongoing role getting and keeping the recipient's financial and legacy affairs in order.

Nearly 12 million care recipients need full assistance managing their finances. But nearly half of their financial caregivers do not have the legal authorization, such as a durable power of attorney, to perform all the roles they play.³⁴ And three-fourths of family care-givers haven't even discussed their financial roles with the care recipient. That reticence may be due to the recipient's mental condition, but more often it's a matter of family taboos about discussing finances, plus the fact that the caregiver just gradually assumed financial roles. In short, financial caregiving merits more acknowledgment and discipline than it generally receives. And we must note that, although it's unconscionable, financial abuse of elders is on the rise, with some of it perpetrated by family members who take money or possessions or try to force changes in their favor in the care recipient's will.

Serving Caregivers

Caregivers' personal finances can be stressed by contributing directly to the recipients' care and by the opportunity cost of the time spent in caregiving. The latter can be very high if the caregiver must cut back on work, reducing both income and retirement savings. Seventeen percent of Boomer caregivers have retired early or quit their jobs, and 21% have reduced hours or job responsibilities as a result of becoming caregivers.³⁵ Caregiving can also take a toll on the caregiver's health, and thus health expenses. Two-thirds of caregivers said they could benefit from financial advice.

A variety of services and guides are appearing to ease the work and challenges of caregivers. Target's “Caregiver Essentials” web page curates useful products, such as pill planners, blood pressure monitors, and over-the-counter drugs. For caregivers, they offer smart home products, stress-relief products, organization and planning tools, and helpful books on caregiving. They also provide caregivers with flexible shopping options including subscription service, same-day delivery, and curbside pickup. We expect to see many more services customized to caregivers' needs in the future, and whatever the products or services may be, 40 million family caregivers, and 20 million people becoming caregivers each year, is a very large market.

Caregiving may be a high-touch activity, but a wide range of rapidly evolving high tech can help make caregivers' work and lives easier. For example, in-home patient monitoring and treatment can revolutionize the medical side of caregiving. Caregivers can monitor recipients remotely, check in with them electronically, and be alerted by medical response services when called. Through telemedicine, physicians and nurses can “visit” patients in their homes. And caregivers can use apps for tasks including monitoring the recipient's medications, refilling prescriptions, and making medical appointments. For everyday health services, CVS in-store Minute Clinics provide basics. Most CVS stores have a Higi Station, a wheelchair-accessible booth where caregivers and recipients can get health readings such as blood pressure, pulse, weight, and BMI. Caregivers can also now get online training and real-time assistance when performing nursing tasks. Recently, after caregiving her mom who had early stage Alzheimer's, Carrie Shaw created the Embodies Labs company, which uses cutting-edge virtual reality technology to teach caregivers – both family and professional – how to empathically understand the world from the point of view of their loved one, and thereby provide more respectful and sensitive care.

Services are also cropping up to assist the financial caregiver. The Care.com HomePay service helps family members who hire home care workers with payroll, tax, and other mandated tasks. It also provides access to financial professionals and assistance in hiring home care workers. The True Link service provides prepaid cards for care recipients with settings to prevent certain purchases, such as from telemarketers, and alerts to family members about large purchases. The cards can also be issued to caregivers to make specific purchases.

At the end of caregiving, caregivers may need to reset their own personal and family finances, especially if the recipient has passed away, because caregivers are often heirs. A widowed spouse-caregiver is often the primary or sole heir, and it's common for children-caregivers to receive special consideration in the recipient's will. The experienced retiree-caregiver is better prepared should another loved one need care and has had an advance look at what life would be like as a care recipient. For many retirees, caregiving ends with the death of a spouse, and they enter our next personal and financial crossroads, widowhood.

Emotional Adjustments

Widows make emotional and practical adjustments at different paces. Although some widows never recover from the loss of their spouse, our research showed that after approximately three years of grieving and adjusting, the physical and emotional health of widows typically returns to normal levels, or we should probably say to “new normal” levels. Many widows discover resilience they weren't sure they had, and more than three-quarters of widows said that after losing their spouse, they discovered courage they never knew they had.

Many widows deal with tension between preserving the past and creating a future. Their progress may be measured in milestones: When to deal with the spouse's clothing and personal effects. Whether to take the trip they'd planned. When to begin to socialize as a single person. Progress can be complicated by their responsibilities when widows have jobs, have children living at home, or are caring for parents. And progress can be impeded by health issues. Especially early in widowhood, the chances of serious illness and depression can rise.⁴² It's worth noting that while modern society has a wide range of products and services to help people plan for and adjust to both marriage and parenthood, the other side of the lifeline is far less attended to and creatively supported. This ties in to Dr. Robert Butler's notions about gerontophobia. Because we're uncomfortable with death, many needs go avoided or even unnoticed by youth-focused service providers.

Financial Challenges and Surprises

The financial transitions and challenges of widowhood are several and significant (Figure 7.5). While widows commonly experience a drop in income, they also often see a substantial rise in assets as bank and investment accounts, real estate, and other assets transfer mainly into their control. Many also become the recipients of life insurance payouts. So there are many widows at each end of the economic spectrum, including with high home equity or net worth. Ironically, at present, the highest concentration of poverty is among single older women, while at the same time, the highest concentration of wealth is also among single older women. However, even the affluent widow can face the immediate challenge of lack of cash because assets in the late spouse's name may not be accessible until the estate is settled, and assets like real estate aren't liquid.⁴³

At the start of widowhood, many feel stressed about immediate expenses, with funeral costs coming on top of regular housing and health and other costs. Widows may need to remix their everyday finances and eventually make bigger adjustments to maintain their lifestyles and protect their assets.

The key word is “eventually.” Many widows report feeling pressured to make financial decisions quickly, including from well-intentioned family and friends offering unsolicited advice. The experts say it's important to distinguish decisions that need immediate attention from those that don't. Big decisions should wait: “Don't put your house on the market. Don't give away money to your children or charity. Don't sell stocks or bonds. Eventually, any of these steps may make perfect sense. But take a breather in the overwhelming weeks and months after a spouse dies.”⁴⁴ Experienced widows advise new ones to avoid making major financial decisions.

Over time, widows prove resilient financially, just as they do emotionally. Only 14% of widows say that they were making financial decisions on their own before the spouse died. As widows, 86% do so.⁴⁵ They adjust their everyday finances and then they look ahead. Widows are much more likely than married couples of the same age to have wills, advanced health care directives, and designated powers of attorney. Experience brings confidence. Over 70% of widows consider themselves more financially savvy than other people their age.

Serving the Newly Widowed

Organizations that recognize widowhood as a distinct and important lifestage are developing innovatively pragmatic services. For example, Peacefully is a service that takes care of the “loose ends” of life, so that surviving loved ones can focus on what matters. It helps people deal with tasks including notifying Social Security, canceling utilities, dealing with social media, and transferring bank accounts. The start-up was inspired by a Millennial entrepreneur's experience watching her family struggle with all the immediate burdens after they lost her grandmother.

Created in 2001, Everest describes itself as “a funeral concierge service rolled up into a life insurance plan. When help is needed, we are one call away. We are there to guide families through a very emotional, complicated, and confusing time in their lives…. Everest has combined on-demand, personalized service, technology and consumer advocacy to revolutionize traditional funeral planning.” When help is needed, Everest advisors are ready to personalize the funeral plan, compare and negotiate prices on funeral homes and products, and work with life insurance companies to get monies to the beneficiary quickly. Families can make informed decisions without having to research their options. Everest can be purchased directly, obtained as an add-on to a life insurance policy, or sometimes accessed as an employee benefit. More than 25 million people in the United States and Canada are covered by Everest.

Other services to ease the immediate challenges of making funeral arrangements include Parting.com, launched in 2015, and Funerals360, launched in 2017. Both help people find the right funeral home, comparing the services and costs of funerals and cremations by local area.

Undertaking LA brings the funeral director to the home of the deceased and walks family members through the death rituals, such as washing and dressing the body and holding an in-home wake. The entrepreneurial pioneer of this enterprise is Caitlin Doughty. In addition to her years as a mortician, she has taken on our modern discomfort with death and travels the world speaking on the history of death, including its culture, rituals, and the funeral industry. In 2011, Caitlin founded the Order of the Good Death, a death acceptance collective that has been featured everywhere from NPR to the BBC to the LA Times. She produces a web series, “Ask a Mortician,” and wrote a book, Smoke Gets in Your Eyes: And Other Lessons from the Crematory, which was a New York Times bestseller.

Financial services firms try to ease the complexity of widowhood with services specifically designed for when a loved one passes away. For example, specialists on the Survivor Relations Team at USAA create a “dashboard” overview of the steps necessary to manage and settle accounts, including how to submit required documents electronically. A variety of other resources provide guidance, and USAA offers survivorship consultation with specially trained financial advisors.

When a spouse passes away, money and other assets go in motion to the widow and also to children or other family members in many cases. That makes it a delicate time for financial services firms because many widows change banks and almost half of widowed women change their advisors.⁴⁶ Sometimes they switch under the influence of family or friends. Kathleen Rehl, financial planner, author, and widow, points to another cause: “In that early stage of widowhood, it is critical to have someone that you can think things through with – not tell you what to do. That's why many widows leave the advisors because the advisors try to tell you what to do.” Rehl is a faculty member of the Financial Transitionist Institute, where they teach advisors to establish “decision free zones®” by helping clients understand what decisions can be placed on hold while they're grieving and where an immediate decision is really needed.

The widows we surveyed offer good advice to the financial professionals trying to serve them (Figure 7.6), starting with turning down the pressure to make decisions.

Of course, the best way to protect the customer relationship is to have been serving the couple all along, including helping them prepare for the eventuality of one of them dying. That includes the seemingly mundane details of making sure that accounts are in both names, key documents are accessible, and cash can be available. Couples need that basic help: more than half of widows say that they and their spouses did not have a plan for what happens when one of them passes away, and three-quarters of married retirees say they would not be financially prepared if their spouse died.