Fidelity has an interesting Family Finance Study about the attitudes and expectations of boomers and their millennial children regarding retirement finances and healthcare.
To qualify, parents had to be at least 55 years of age, have an adult child older than 25 and have investable assets of at least $100,000. Children qualified if they were at least 25 years of age, had at least $10,000 saved in an IRA, 401(k) or other investment account.
Clearly, that’s not a representative study. Regardless, the results are interesting.
Key Survey Findings
- Financial Dependence: While a majority of parents (93%) feel it would be unacceptable to become financially dependent on their children, only 30% of children feel the same way. In fact, nearly one-quarter 23% expect to financially support their parents.
- Estate Execution: Although 92% of parents expect one of their children will assume the role of executor of the estate, when asked, more than one in four (27%) of the kids identified as filling this role didn’t know this. Of note, 55% of parents expect the oldest child to be executor.
- Caregiving: While 72% of parents expect one of their children will assume long-term caregiver responsibilities if need be, 40% of the kids identified as filling this role didn’t know this. Of those that do, 58% are women.
- Managing Finances: While 69% of parents expect one of their children will help manage their investments and retirement finances, more than one-third (36%) of the kids identified as filling this role didn’t know this.
- Retirement Discussion: A significant portion of those surveyed who have yet to discuss retirement plans (38% of parents, 43% of adult children) say it’s because the subject never comes up! An additional 31% of parents don’t want their children to count too much on their inheritance.
- Long-term care: 43% of parents indicate they have not had detailed conversations with family members about long-term care and eldercare—and an additional 23% have not had any conversations at all. Furthermore, while 72% of children think their parents should be tackling the issue of long-term care/eldercare, only 41% of their parents say they actually are.
- Will and estate planning: While parents are more likely to believe they’ve had detailed conversations with their children on this subject (69%), 52% of children say they haven’t.
- Living expenses in retirement: More than a third (34%) of parents indicate they have not had detailed conversations with family members about covering their living expenses in retirement—and an additional 16% have not had any conversations on the topic at all.
- Location of important documents: 3 out of 10 families surveyed disagreed as to whether or not the children knew where to find important family documents such as wills, power of attorney and health care proxies.
The study is flawed because 1 in 3 Americans Has Saved $0 for Retirement and a mere 26% hit the Fidelity cutoff point of $100,000 or more.
Regardless, the study contains much useful information. If you are over 55, do your kids know where estate documents are?
MarketWatch notes that one in nine Americans 65 or older has Alzheimer’s; at age 85, it’s one in three.
“It’s always too early to talk about finances — until it’s too late,” said John Sweeney, Fidelity’s executive vice president of retirement and investing strategies. “The families who feel the most comfortable are the ones who have these conversations early and often and revisit their decisions on a regular basis.”
Mike “Mish” Shedlock