Study Finds Parents and Adult Children Struggle to Communicate about Critical Financial Decisions
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The study also found that the timing of these discussions is a barrier. In fact, only one in three (34 percent) parents and their children agree on the best time. Parents are more likely to cite when they near or enter retirement (37 percent) as the right time, while children indicate that they’d like to have a conversation before their parents retire or have health issues (37 percent).
“With parents living longer and the increasing financial complexity that the sandwich generation faces, it’s critical that families break down barriers, have these important conversations to make informed decisions and take control of their finances, rather than reacting to a crisis after it’s too late,” said Murphy. “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.”
Once Started, Conversations Are Well Received and Beneficial to Families
The study also validates the assumption that taking the time to have more detailed conversations can dramatically increase peace of mind, reduce anxiety and foster additional discussions. When adult children and their parents had detailed conversations about these critical topics, 83 percent agreed the other was willing to talk about wills and estate planning, eldercare or covering retirement expenses.
The study also uncovers the overwhelmingly positive impact of having these conversations about estate planning. For example, peace of mind of parents jumps from 61 percent to 91 percent when comparing those parents who have not had detailed conversations with their adult children versus those who have. Additionally, parents who have had detailed conversations with their adult children feel significantly more at ease about their children’s financial future – 68 percent vs. only 30 percent – among those who have not had detailed conversations.
New Resources to Help Families Connect and Plan, Increase Peace of Mind and Reduce Anxiety
This lack of communication may also have an adverse effect on adult children and their feelings about their own retirement readiness. In fact, “anxious” is the top feeling they cited (36 percent) when describing their own retirement. In addition to having thousands of trained investment professionals to help investors develop strategies to protect and pass wealth between generations, Fidelity has published a Family Finance Conversation Guide and Viewpoints article on its Personal Economy web site, which includes a how-to discussion guide and checklist to help start conversations and facilitate dialogue between parents and their adult children.
For more information on the Intra-Family Generational Finance Study, an executive summary and infographics can be found on Fidelity.com.