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.
This post comes from Krystal Steinmetz at partner site Money Talks News.
If 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.
According 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
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.
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.
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.
A family member of mine had a much different issue; not enough assets and a health issue that has caused an early retirement in their early 60's.
They had health insurance, but PPOs only cover so much. 20% of $500,000 with bills still coming.... and now this person is going to be released needing in home care part time. Adult children (lazy working BASTARDS!! shameful a-holes have full time CAREERS!) cannot provide care, as they are working and have kids of their own. The PPO does not cover ANY of the in home care giving.
So, the adult kids are scrambling to figure out what to do, how to find out what little assets (and they ARE little because many boomers expect medicare and social security to cover everything and are not saving) are available.
Aging parents need to think about what they will do when they get older, maybe think about long term care insurance, burial plans. I had this conversation with my mom, she got furious with me. Sorry, but the average funeral these days is 7-10k. With two kids that will need college very soon and two parents that NEED to plan, I can't pay for EVERYTHING.
I am not sure where MSN gets that people have all these ASSETs. Do people REALLY have money these days?
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...
"Some parents said they avoid the financial talk because they don't want their children to count on receiving an inheritance"
I've served as the personal representative for my parents affairs as well as for my wife's mom's affairs. My folks didn't talk to each other about money ... much less to my sister or I. It was a nightmare trying to determine first - just what assets they had and second - jumping through all the hoops necessary to actually gain control of those assets once we discovered them. IIt was just dumb luck that discovered nearly $15K worth of assets via "missingmoney.com" nearly 2 years after we had initially closed their estates.
My wife's mom situatioin was a completely different story - her assets were well identified, and all her accounts were appropriately titled to allow us to gain control without a problem after her passing.
While the talking about teaching their kids about responsible money management are giving good advice - they're missing the point of this article completely. Parents that don't provide information regarding what assets they have and arrange to make the transfer of those assets as simple as possible after their passing are leaving their children a mess to try to address after they are incapacitated or gone.
And here I thought this was going to be a story about parents telling their 'adult children' to get a *bleeping* job and make their own way in the world.
Nope, I'm on MSN, this is about lubing up the rents to cough up the dough to the little bastards so they can spend it for them in their old age.
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