When you’re part of a family and have a legacy to think about, why make financial decisions in isolation? As retirement nears, it’s common for adult children to offer advice, lend a hand, or prepare to inherit family assets. By planning together, you and your family can align your goals, reduce stress, and make sure wealth is transferred in a tax-efficient manner. You’re also much more likely to avoid the “third-generation curse,” the common tendency for the wealth accumulated by the first generation to be lost by the third generation.
Open conversations around wealth help to build trust and keep everyone on the same page. If you share your financial priorities (e.g., making sure long-term care is covered, preserving the family cottage, or leaving a meaningful legacy) your adult children get a clearer picture of what’s ahead and can contribute ideas of their own. This way, everyone knows what to expect and can make confident decisions without stressful surprises.
Let’s take a look at some of the best ways to accomplish family-friendly retirement planning.
How to engage and involve your adult children
It may be best to schedule an initial retirement conversation with your family and share as much detail as you’re comfortable with. You may not need or want to share the exact amount of your net worth but being able to discuss how you’d like your assets distributed and why your wishes are what they are can help prevent disagreements and hurt feelings down the line.
- Engage early and often. Ask your advisor to include your heirs in a planning meeting so that they can fully understand your current situation and retirement wishes.
- Share values and goals. Explain why you’ve chosen specific accounts or investments for certain things. The “why” often matters more than the “what.”
- Use guided questions. Your advisor can help prompt discussion around inheritance estimates, estate structure, and retirement vision.
- Define roles and expectations. Decide whom in your trusted circle will handle bill payments, investment reviews, or executor duties. Ensure that these individuals are willing and able to carry out their duties and that they fully understand your wishes.
Key things to consider – with help from your children and financial advisor
- Retirement income sources: Sit down to review your potential for CPP, OAS, and any employer pensions you have.
- Wise use of personal savings: Figure out the best way to use your RRSP, TFSA, and non-registered assets.
- Properties: Do you own a cottage you want to keep in the family? Is there a business you’d like to wind down or sell?
- Estate plan prep: Do you already have wills, powers of attorney, and health directives? When’s the last time they were reviewed?
- Long-term care plan: What are your potential home care costs or assisted-living expenses? Do you have a strategy ready just in case?
- Boost your tax efficiency: Are there ways to minimize probate fees, use tax-sheltered accounts, or earn tax-efficient income?
Useful tools and strategies
The most effective intergenerational planning often balances tax savings with a sense of fairness in the family. Popular tools and methods for achieving this dual purpose include:
- Lifetime gifting – transferring funds during your lifetime to reduce estate size
- Registered plans – leveraging RRSPs and other registered accounts for tax deferral and TFSAs for tax-free withdrawals
- Life insurance – for covering final expenses and providing a tax-free death benefit to heirs
- Family trusts – a great way to protect assets and allocate income among beneficiaries
Making the most of RRSPs and TFSAs: A handy comparison
| Feature | RRSP | TFSA |
|---|---|---|
| Contribution limit | Based on previous year’s earned income | Annual fixed limit (e.g., $6,500 in 2024) |
| Tax treatment | Deductible contributions; taxable withdrawals | Non-deductible contributions; tax-free withdrawals |
| Impact on government benefits | Withdrawals may reduce OAS/GIS | No impact on OAS/GIS |
| Estate transfer | Taxable on death unless rolled over to surviving spouse | Tax-free to named beneficiary |
Before you start: Four key steps for retirement planning prep
- Gather documents. Collect statements for bank accounts, registered plans, insurance policies, and your will and powers of attorney.
- Reflect on priorities. Jot down concerns or wishes around health, legacy, and family support.
- Reach out to financial professionals. Join forces with a financial advisor, tax specialist, or estate lawyer to help you detail and implement your plan. Choose someone who can comfortably work with you and your family to ensure open communication and convey a clear understanding of your wishes.
Create a shared journey
By collaborating across generations, you and your family can transform financial planning from a solitary task into a collaborative and shared journey. Open dialogue, clear strategies, and professional guidance will help to ensure that everyone’s needs and values are honoured, today and for years to come.
For a more in-depth conversation on retirement planning, reach out to a Meridian wealth advisor.
Learn more about wealth and retirement
The basics of retirement readiness
Estate planning: who gets what – and how