Not enough financial discussions are taking place between adult children and their parents leading to major misunderstandings about the older generation's retirement security and estate plans.
Not enough financial discussions are taking place between adult children and their parents leading to major misunderstandings about the older generation’s retirement security and estate plans, according to a new survey.
Fidelity Investments’ first-ever Intra-Family Generational Finance Study revealed that 97% of parents and children disagree on whether or not a child will take care of the parents if they become ill.
Another area of disagreement was inheritance and estate planning. Children believe that their parents are actually worse off than they are, underestimating the value of their parents’ estate by more than $100,000. Plus, 24% expect that they will need to help their parents financially during retirement, even though only 97% of parents say they won’t need any help.
“Given the economic pressures facing families today, it’s troubling that detailed conversations are not happening, especially among those in the sandwich generation who may be grappling with competing financial priorities ranging from planning for their own retirement and paying for a child’s college education to dealing with eldercare, estate planning and retirement challenges with their parents,” Kathleen A. Murphy, president of Personal Investing at Fidelity Investments, said in a statement.
Despite the fact that adult children and their parents didn’t agree on some major financial topics, 95% say some conversations have taken place. For instance, only 11% of children believe discussions about retirement readiness were very detailed.
Almost a third of parents (30%) said the top barrier to having discussions about future finances was that they don’t want their children to overly rely on potential inheritance. However, 40% of adult children said the top barrier is that they feel like it’s not any of their business to ask parents about these topics. As a result, these conversations are being held later when parents are near or entering retirement.
“Families need to discuss these topics earlier and in greater detail, then plan accordingly, as it’s possible that adult children may have to make financial and healthcare decisions for their parents later in life,” Murphy said in a statement.