Just in time for the Thanksgiving holiday dinner, Fidelity Investments released a survey that makes it clear that when boomer parents and their adult children talk about the older generation's finances, the conversations often go nowhere. Neither the kids nor their parents hear the same message or walk away from the conversations feeling reassured.
The big talk
The study found that 94 percent of adult children and their parents believe it is important to have frank conversations about:
- Whether parents have enough money to live comfortably in retirement.
- How they will afford health care, including long-term care -- and whether an adult child is likely to be called upon to provide direct care if a parent needs it.
- How much money is likely to be left in their parents' estate and how the parents intend to distribute it.
Shock of shocks -- even when these conversations do take place, adult children don't believe they've heard the whole story and aging parents aren't all that eager to set the kids straight.
- About 30 percent of parents say they don't want to provide too many specifics about how much their adult children could inherit because they might count too heavily on getting it.
- Some 22 percent of parents say talking about final arrangements pertaining to their death will upset their adult children, and 9 percent of their children say that their parents would be upset discussing it.
- Fifteen percent of parents say their finances are none of their adult children's business, and 40 percent of the adult children say that as well.
None of this comes anywhere close to adding up to 100 percent because both parents and adult children have a zillion other excuses not to be too candid about money.
The great worriers
So what's the bottom line? For one thing, when parents and adult children don't communicate well, everybody worries -- sometimes unnecessarily.
- Nearly one-fourth -- 24 percent -- of adult children believe they will have to help their parents financially, while nearly all -- 97 percent -- of parents surveyed say they will not need help. That's a big disconnect.
- While 49 percent of parents describe themselves as confident about their financial situation in retirement, only 28 percent of adult children think that is their parents' situations.
- Parents see a need for frugality that their children don't perceive, with 38 percent of children thinking their parents' lifestyle is or will be very comfortable in retirement. But only 20 percent of parents describe their situation that way.
- On average, adult children underestimate the amount of money they will inherit from their parents by $100,000.
Finally, the study found that talking honestly and in-depth about these topics feels good. Among parents, 86 percent said sharing this kind of retirement planning information gave them peace of mind. Or as Kathleen Murphy, president of personal investing for Fidelity, says, "The worst conversation is no conversation."
So, after Thanksgiving dinner, open another bottle of wine and give the kids all the details. They'll be grateful.