The talk parents need to have with adult children

A Fidelity study found that adult kids and their folks aren't on the same page when it comes to discussing finances.

By MSN Money Partner Fri 4:42 PM

This post comes from Krystal Steinmetz at partner site Money Talks News.


Money Talks News on MSN MoneyIf you think the birds and the bees is the most uncomfortable discussion a parent and child can have, think again. It seems there's an even more difficult talk: the one between parents and their adult children about money.


 Adult with elderly parent © Digital Vision/SuperStockAccording to Fidelity's Intra-Family Generational Finance Study (.pdf file), parents and their adult children agree that discussing finances -- including retirement planning, elder care and inheritance -- is important. Unfortunately, they can't seem to agree on when the conversation should occur, and how much financial detail should be covered.


The study found that while parents prefer to delay the conversation until after they've retired, most children said the finance discussion should occur earlier, before retirement or potential health issues arise. Overall, just 40 percent of parents said they had a detailed conversation with their children about expenses during retirement.


Some parents said they avoid the financial talk because they don't want their children to count on receiving an inheritance, MarketWatch said. The top reason kids said they don't want to broach the discussion is because they believe it’s upsetting to talk about -- both for them and for their parents.


In a press release, John Sweeney, executive vice president of retirement and investing strategies at Fidelity, said:

These discussions aren't always easy, but there can be real emotional and financial consequences when they don't happen or lack sufficient depth. It's absolutely critical that families take the time and break down any barriers to sort through important matters related to retirement preparedness, caregiving responsibilities, estate planning and the tax implications of an inheritance. The alternative is putting these matters off until a crisis occurs, at which point the options may be limited and there could be unintended financial repercussions.

According to AARP, Lauren Brouhard, senior vice president of retirement at Fidelity, encourages adult children to talk to their parents about how they're going to live when they're retired. It's also a good time to discuss important documents, such as a will, health care directives and a power of attorney form.


AARP wrote: "While adult children can remain sensitive to a parent’s financial privacy, 'there are some key things that children should be aware of and need to know if they need to take on responsibilities,' Brouhard said."


Here are some key findings of the Fidelity study:

  • Financial security. While most adult children (56 percent) think their parents worry about financial security, in reality, less than a quarter (23 percent) actually worry.
  • Estate value. It turns out, it's not always easy to figure out how much your parents' estate is worth. The study found that adult children underestimate the estate value by more than $300,000.
  • Caregiving. Forty-three percent of adult kids expect that they or a sibling will need to act as a caregiver in their parents' retirement years. Mom and Dad don't agree. Only 6 percent said they expect their children will have to care for them.

Because discussing financial matters can be tense, Fidelity suggests initiating the "voice not vote" rule, "which makes adult children aware that their parents' financial planning is not a democracy. The parents are ultimately in control of their decision making."


This is definitely a talk I need to have with my parents and my four siblings. But like so many other Americans, we avoid it because it's an uncomfortable (though necessary!) discussion.


How about you? Have you had a discussion about finances with your family?


More from Money Talks News

VIDEO ON MSN MONEY

35Comments
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I'm building a 68 hot rod just to give the little brats one more thing to argue over when I'm gone.
Fri 9:13 PM
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My parents never told my brother or me anything about their finances, but now that they are in the nursing home and my brother is disabled, I have power of attorney, and for better or worse, have figured out everything about their finances.  I don't think they were trying to hide anything, it's just that their generation was tighter-lipped about money.  I am trying to be uber-responsible with their finances, as I am with my own.  One example is the $8000 of uncashed checks in unopened envelopes that I found in their house and put into their bank account.  It was obvious that they could no longer take care of themselves, let alone their finances.  There is not much in their estate, but a whole lot more than there would be if I hadn't plugged the leaks where they were were bleeding money unnecessarily (insurance and tags on vehicles that didn't run, fees for services they weren't using, utilities and TV services for an empty house, etc.).  This all works because I have their best interest at heart and am trustworthy, but an unscrupulous person could clean them out in a hurry.  This all would have been much easier if they had filled me in on a few things before they became so disbled.
Fri 8:40 PM
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bigallibear,

I and my two siblings did the exact same thing. Losing a parent is hard, but ALL of the legal paperwork, including funerals and burials, were totally taken care of. EVERYTHING  was settled without ONE argument. And THAT IMO is better than anything else.

Fri 8:28 PM
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When there is a lot of money involved, the children generally know it, and details are not necessary.

However, when children wrongfully believe that they will have a substantial inheritance, they tend not to save money themselves.  Remember more times than not, by the time children inherit, they are already retired themselves.

Fri 8:30 PM
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One of the best things my Mother did was share estate information with my brother and myself. We each had copies of her will, lists of everything she owned of value and where the valuables came from. We were also listed on her utilities as authorized parties so when she passed we just had to call to disconnect. We discussed the possible need for nursing care including nursing home care. Loosing was her still difficult but so much easier than most of my friends who had no idea of their parents finances.
Fri 8:12 PM
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  " adult children underestimate the estate value by more than $300,000 " Where in the world did you get this information from? Under by 300 G's ? Are you dopes on drugs or what ? Most estates are no where near 300 grand to begin much less be off by 300. And if your little bastards are counting your cash before you have had your last breath then leave it to the dogs. Your local shelter will make better use of it and the dogs will wag there tails in your honor.
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Sometimes care-giving can be an honor and not necessarily a responsibility...At least from my experiences.

But any rate, sometimes it's difficult for a parent to give up their power and allow an adult child to give them, "the talk."
Finding a way for the parent to retain that power like allowing them to pick the time and day for the conversation can go a long way...

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Oh Casey!!


"Some parents said they avoid the financial talk because they don't want their children to count on receiving an inheritance"

Fri 9:50 PM
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My plan is simple:  spend my last dime and die the next morning.
Fri 11:16 PM
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My husband and I have shared our wills with our daughter, she has been given details of our financial affairs, and we have discussed our living wills with her.  We have all talked about our plans and expectations regarding our old age future (we're in our 60s) and our deaths.  I guess I don't understand why these are such taboo topics for many people.  Bob both my husband's and my parents were open with each of us and our siblings and we were so grateful that all was in order and we knew their wishes when we needed to take care of their estates.  There was no arguing or difficulties because all had been decided and discussed in advance.  We will all die, with luck after enjoying old age, and this is a gift we can give our children:  make this part of our lives easier for them.
Fri 8:55 PM
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i was left nothing and so in return i leave nothing...makes it real simple...Wilmer bring me a good cold beer...
Sat 3:31 PM
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I think this article is really missing something. Parents need to talk to their children about responsible use of money, saving money, the dangers of debt, avoiding credit card debt, and compound interest (which works both ways - one to a person's advantage, and the other which increases debt and the actual cost of a purchase). Too many young people are not wise stewards of the use of money and much of it is because parents never talked to their children about how to use money. Of course, some of that is probably because parents have been poor stewards as well.

On the other side, when parents have accumulated some financial assets, their children need to know how they did it - hard work, scrimping and saving, putting money away regularly, etc. It's not as much about how much has been saved as it is about how it was accomplished.

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some people even after months are butt hurt inside and want something others have and continue to post about that same person for months even after that person wasn't on like me in this case-  i wonder where RJ clone #2 and the other trolls are?
Sat 1:10 AM
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I have told my family they are all out of my well, so start kissing up???
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