Parents who are now at retirement age think that they have done a great job discussing finances and estate plans with their children. However, their children think the exact opposite about the situation. According to a new study done by the Fidelity Investments Intra-Family Generational Finance Study, this is the new generation gap.
The key point in the study is that many parents are failing to have critical conversations about their finances and estate plans with their grown, adult children. For the baby boomer generation, money and estate planning are taboo subjects. However, the same study showed that having this important conversation with their children gave parents an increased peace of mind and reduced anxiety.
Key Findings in Study
Six key highlights can be pulled from the study about the new generation gap in families. These points include:
· Neither generation feels comfortable talking to the other about money Only around half of parents and children feel comfortable discussing finances with one another
· Nearly 64% of parents and adult children disagree on the best time to discuss estate planning This includes retirement plans, wills, other estate plans, nursing home care, and final wishes. Most parents want to wait until after retirement, and most children want to discuss it before.
· In many families, serious estate planning discussions are not happening at all Around 40% of parents have not discussed any finances or estate planning with their children. Parents mainly do not want their children to rely on their inheritance, and children mainly do not want to upset both parties by bringing it up.
· Parents think that they are doing a better job at explaining their finances and estate plans than they are A full 60% of parents who have had conversations with their children think that they had full, detailed conversations about their plans. However, only 42% of their children believed the same thing.
· Many parents do not think that they will need help from their adult children, but lots of the children think that they will The baby boomer generation is a very independent group. A full 96% of parents do not believe that they will need financial assistance from their children, but almost 30% of children think that they will need to help their parents at some point. Additionally, only 6% of parents think that their children will need to provide elder care for them as they age, but 43% of children think that they or their siblings will be providing care.
· Children may be more nervous about their parents’ finances and estate plans than is necessary Over 56% of children believe that their parents are worrying constantly about their finances, but only 23% of parents worry about their financial future more than a few times per month.
How to Fix the Generation Gap
The main takeaway for parents from this study is that if you are nearing retirement age and have adult children you need to have the estate planning talk. Discussions need to be had that involve serious, detailed conversations about finances, estate plans, and any possible concerns. It should also not be a one and done discussion. Have these talks periodically about different aspects of your estate plan. Make sure that all of your children know your wishes and that all the documents are in place. Although the first conversation may be difficult, once you break through the initial barrier of having the talk you will have greater peace of mind and better estate plans in the long run.