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Rogan Should we just stick our heads in the sand until something happens?

by Michael Rogan

Special to Tropical Breeze

By now we all know that the leading edge of the "baby boomer" generation is reaching retirement. This has led to many predictions of dire consequences for not only the boomers, but for our stock markets as well as our entire society.

Perhaps the most popular doomsday prediction is that as the 78 million baby boomers reach retirement age, they will be forced to sell their investments in our stock market, both to switch the proceeds to less "risky" investments, as well as to simply pay their bills. Consequently, so the story goes, prices in our stock market will decline dramatically, remaining depressed for decades to come, if not permanently.

This is one of those gloomy ideas whose appeal lies in its simplicity - it seems logical, its results are scary, therefore it is something to be worried about. The fact is, while it seems reasonable, it can't and won't happen, for at least two reasons. First, stock markets are ultimately priced based on earnings, multiples and the prevailing interest rates of competing fixed income investments. Thus any substantial depression of prices would necessarily be short lived. More importantly, perhaps, for good or bad, most baby boomers won't have anything to sell. According to the US Government Accountability Office (GAO), more than two-thirds of the assets held by baby boomers are owned by the richest ten percent of them. These folks won't be forced to sell anything. A recent study also tells us that for nearly two-thirds of those 65 or older receiving Social Security benefits, those benefits represent at least 90% of their income.

So, while that debunks the baby boomer/stock market crash myth, it raises other very serious issues. For boomers, quite possibly the most important of all will be dealing with the care of aging parents. Virtually all boomers currently are either aging parents, or the children of an aging parent destined to become aging parents themselves. Few issues will affect so many people or are more inevitable.

During the holidays, many of us will gather with our families as we have done for many years. While this provides a great opportunity for talking about this issue with our parents and children, it remains a touchy subject. Should we just stick our heads in the sand until something happens that forces the issue?

A great guide for families wanting to be proactive is the new book from Dan Taylor called, The Parent Care Conversation. Dan Taylor is an attorney, and a 20-year veteran of the financial planning industry, as well as an occasional guest on my radio program. Confronted suddenly with caring for his aging father a few years ago, Taylor was thrust into an area with which he had no knowledge or experience, but which had great urgency. To his dismay, he found the elder care industry fragmented, confusing and contradictory. Like many of us, he already led a busy life, yet he had no choice but to arrange the best care possible for his father. Throughout his experience, he found himself wishing he had planned for this day with his father many years before, when his father was still vibrant and coherent. So, he decided to help others learn from his experience.

The Parent Care Conversation separates the topic into six conversations: The Big Picture Conversation (the parents' overall vision of their future); The Money Conversation (financial planning needs and strategies); The Property Conversation (how property and possessions should be distributed); The House Conversation (what should happen with the family home); The Professional Care Conversation (the parents' preferences for care); and The Legacy Conversation (how the parents wish to be remembered).

If you are the parent in this equation, you must realize the tremendous effect of preserving the family that these conversations can have. If you are the child, you might be surprised how willing your parents will be to discuss these topics. (A recent survey by The Hartford found that most parents are much more willing to talk about these issues than their children think they are, but they often hesitate to bring up the subject in order to ‘spare' their children from discomfort.) Please recognize that the chance for unity-shattering consequences for your family in the absence of planning for this issue is tremendous.

So in this time of year when so many of us will get together with our families, use this book as a guide to lead you into what could be some of the most important conversations of your life, and for your family. Have a happy and safe holiday season.

Michael Rogan is president of Rogan & Associates Financial Planners, a locally-owned financial planning brokerage firm based in Safety Harbor. He brings nearly two decades of financial expertise to the local airwaves on the radio show, Financial Planning for Life, heard at 11 a.m. weekdays on AM 1250 WHNZ. For more information, call 727-712-3400 or visit www.RoganFinancial.com.