Nontraditional families face unique challenges regarding retirement and savings and should be open to seeking help.
Actors Ty Burrell, left, and Jesse Tyler Ferguson, right, of the ABC comedy “Modern Family” posed with plaintiffs Laurie Wood and Kody Partridge, one of three same-sex couples who sued Utah over same-sex marriage rights, at a June fundraiser in Salt Lake City.
Having recently celebrated Pride month and the growing level of diversity we enjoy in Minnesota, I was reminded of the evolving structure of the American family in 2014. And it’s not just same-sex couple families that are driving this changing picture.
Today’s modern families come in many shapes and sizes, from multigenerational families with three or more generations living under the same roof, to boomerang families where adult children have returned to live at home with mom and dad.
In fact, the “traditional family” structure — families where the spouse is married to someone of the opposite sex with at least one child under 21 living in the household — now represents only 19.6 percent of U.S. households, down from 40 percent in 1970, according to the U.S. Census Bureau.
Clearly, modern families are now a significant part of our national identity. But how are these families approaching their retirement and financial issues?
To find out, Allianz conducted the LoveFamilyMoney study with more than 4,500 Americans in traditional and new family structures. In addition to traditional families, the study identified six distinct modern family cohorts, including same-sex couple families, single-parent households, those with adult children returning home (boomerang families), multigenerational families, blended families (households with children from previous relationships) and older parent families (40+) with children under age 5.
Not surprisingly, we found positives and negatives within their responses.
On the encouraging side, today’s families report having stronger emotional ties than families in the past, which translates to more open, honest discussions about money. More than half (54 percent) of modern families say they openly talk to their children about their personal financial situation, and 47 percent say they have actively encouraged their children to invest and save for their own retirement goals.
Lack of security
Despite these emotional ties and a stronger economy, modern families say they are struggling financially. Although 85 percent of respondents identify themselves as “middle class” — a status that has traditionally meant a level of financial security — nearly half (47 percent) of all families say that they are just ”making ends meet,” “struggling financially” or ”poor.”
Meanwhile, 57 percent of modern families said they were struggling.
Furthermore, only 30 percent of modern families say they feel a high level of financial security vs. 41 percent of their traditional family counterparts.
And more modern families report financial hardships in the past. Thirty-six percent of modern families have collected unemployment, vs. 21 percent of traditional families. And twice as many modern families have declared bankruptcy (22 percent) than traditional families.
First, modern families should understand that they are not alone in feeling financially challenged. All family types are experiencing financial stress, but modern families typically have had more financial hurdles to overcome. Whether it’s the added cost of caring for an elderly parent or the challenges of combining finances in a blended family, many of these unplanned expenses or “unplanned dependents” can be enough to throw any financial plan off track.
Modern families also seem to be less willing to seek help with managing their finances. Less than half (43 percent) of modern families say they have ever used a financial professional vs. 53 percent of traditional families. The reason? More than a quarter (26 percent) said they “don’t make enough money to think about financial planning for the future,” and nearly a third (31 percent) say they have “too many expenses and/or debts to pay off before I can think about planning for the future.”
Modern families can take a few simple steps to improve their financial future:
Continue to discuss finances. Modern families are setting a positive trend of openness in talking about finances with their kids. The more discussion about finances, the better chance their kids will be ready for the future.