A swarm of Baby Boomers are on the verge of exiting the labor force and hitting retirement. Although the financial collapse hurt millions of overburdened Baby Boomers, many are still expected to retire and do what they want in their free time. However, there doesn’t seem to be any discussions about post-retirement plans between the parents and their kids.
In fact, families are divided as adult kids want to talk about their parents’ finances, while parents aren’t all that eager to. This comes from a new Intra-Family Generational Finance Study (PDF) conducted by Fidelity Investments, which spoke with 1,058 parents and 159 adult children.
The majority of survey respondents agreed that it’s important to have an honest discussion about retirement expenses, wills, estates and eldercare. Most don’t agree as to when those conversations should take place: parents want to wait until after they have retired, while children want to outline the details prior to retirement or a serious health issue transpires.
Nearly half of parents (40 percent) have not had any serious talks with their kids regarding eldercare, living expenses and healthcare during their winter years. The reason for this is because parents feel their children are depending too much on a future inheritance, but kids aren’t being too pushy either as they tend to delay the matter in order to refrain from upsetting their mother and father.
“Admittedly, these discussions aren’t always easy, but there can be real emotional and financial consequences when they don’t happen or lack sufficient depth,” said John Sweeney, executive vice president of Retirement and Investing Strategies at Fidelity, in an interview with the USA Today.
Other findings from the report:
- 43 percent of adult children expect they or a sibling will take on care-giving duties. Only six percent of parents expect this.
- 70 percent of parents are unsure how much money they’ll have in retirement, and 56 percent of adult children are concerned about financial security.
- Adult children substantially undervalue their parents’ estate value by $300,000 or more.
“Ideally, detailed family conversations on these matters should take place well before retirement,” Sweeney added. “Although it’s understandable that parents may have sensitivities and want to delay discussing personal financial matters, the best strategy is to set these concerns aside and have frank discussions sooner rather than later. It’s very possible your children will have to make some financial health care decisions for you later in life.”
How should a family approach the situation? Fidelity recommends starting the discussions early and asking detailed questions, following the wishes of the parents, selecting the right people to speak with and having regular conversations on the issue at hand.
We reported earlier this week that a growing number of seniors on the brink of retiring are overweight and not financially prepared to pay for their healthcare as they get older. With rising healthcare costs, an increasing cost of living and retirees not having enough finances, it could prove a difficult ordeal for Baby Boomers.
