Parents are not having Financial Planning Discussions with their Children Early Enough
A recent study from an American investment firm notes some surprising revelations about the conversations parents are having with their adult children about financial planning.
Approximately 40% of parents have not discussed issues such as estate planning with their children, nor have they discussed how they may fund possible health needs in old age. The study notes that children generally would prefer to have such discussions with their parents well before they retire, while parents would rather wait until after retirement.
The study sides with the children, recommending that family finance discussions “take place well before retirement”:
Although it’s understandable that parents may have sensitivities and want to delay discussing personal financial matters, the best strategy is to set these concerns aside and have frank discussions sooner rather than later . . . it’s very possible your children will have to make some financial healthcare decisions for you later in life.
Talking about financial planning does not just help parents. It also helps their children, who may be planning around receiving an expected inheritance. Adult children apparently often underestimate the value of their parents’ estate by about $300,000. While this is probably a pleasant surprise when children receive their inheritance, it also means that they did not have the benefit of planning their finances around the appropriate figure.
Talking about estate planning early increases a family’s sense of financial preparedness. Close to 93% of parents who opted to discuss their estate planning with their children claimed to have greater peace of mind.
The study concludes by reminding parents that they can revisit the topic of financial planning multiple times; it need not be a one-time event. As financial circumstances change or unexpected expenses occur, it is important to make sure children remain knowledgeable about their parents’ estate planning.
I would simply add that having these kinds of conversations also helps to avoid costly estate litigation.
Thank you for reading,