Financial decisions and family

Bruce HeenRetirement plans and other financial matters are not the most common topics of conversation when it comes to parents and their adult children. But it should be. As a result many young Americans are not prepared to live comfortably in retirement or support their family during a financial crisis.

A study conducted by Fidelity Investments discovered that about 64% of parents and children can not agree on when to have conversations about financial preparedness. The study found that money is a taboo subject for many parents of adult children.

Many families disagree on when the best time is to sit down and have conversations about later-life financial topics such as retirement. According to the study, around 40% of parents indicated they haven’t discussed these matters with their adult children.

“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.

There are three financial misunderstandings that often affect families. Parents lag adult children on sense of urgency about retirement. Adult children are 56% more likely to worry about financial security compared to 23% of parents. Adult children also significantly underestimate the value of their parents’ estate. Lastly, families disagree over who will care for a parent if they fall ill. The study shows that these parent-child disagreements can be avoided by talking about these financial issues earlier.

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