Will You Survive in Retirement Without Your Children’s Help?

Retirement can be a scary time, especially if you’re unprepared. Unfortunately, many parents end up needing financial assistance from their children during their golden years. Will you be one of them? A recent study by Fidelity surveyed 221 parents and their adult children. Surprisingly, adult children are willing to help out their folks as they age. However, 4 in 10 families were not in agreement when it came to the specific roles and responsibilities their children should assume.

“These discrepancies highlight the fact that many families need to do a better job of being on the same page when it comes to financial planning, as there are real emotional and financial consequences when family conversations don’t happen or lack sufficient depth,” said John Sweeney, executive vice president of retirement and investing strategies at Fidelity. “At some point, every family will face issues related to aging, which is why it’s important to take the time to sort through the details related to care-giving responsibilities and estate planning, before declining health — such as dementia or if you become incapacitated — forces the issue. Doing so can lead to far better emotional and financial outcomes for everyone,” said Sweeney.

Key findings:

man looking into wallet with money

Wallet | Source: iStock

  • Even though adult children are willing to help out, roughly 93% of parents are uncomfortable with accepting help from their children. However, only 30% of their adult children feel the same way.
  • When it comes to health care, parents and children can’t seem to agree. Adult children said they or a sibling are also willing to help out if their parents became sick. However, about 45% of parents and their children do not agree on this issue.
  • When is it a good time to have the money talk? Parents and kids are also clashing on this issue. Approximately 67% of families are not in agreement when it comes to deciding on the right time to have a conversation about their parents’ financial situation. The majority of adult children decide to wait to have this important conversation until their parents are close to retirement. Some of topics they are failing to discuss are long-term care, retirement expenses, and estate planning.

What you can do

In order for parents and adult children to get on the same financial page, it will be important for them to start having important money conversations. Here are three ways to make things easier.

1. Have the money talk early

Reviewing finances

Going over finances | Thinkstock

If you are an adult child who desires to help your aging parent become more financially secure, the experts at Fidelity say you should start having those conversations before major financial events occur, like an impending retirement or major illness. The Fidelity study found that too many adult children are having frank money conversations after retirement and when health and finances have become an issue. At this time it could be too late to address these issues. “It’s actually a good idea for conversations about finances to be taking place among families no matter what your age, whether you are in your twenties and looking to build a strong financial foundation or in your sixties and transitioning into retirement,” said Sweeney.

2. Don’t be shy about asking questions

Mother and daughter spending time together

Mother and daughter | Thinkstock

When it comes to your parents’ finances, it pays to ask detailed questions. Having the answers to your questions can help avoid surprises when it’s time to make financial decisions. “Don’t be afraid to ask even the most seemingly obvious questions. Three out of 10 families surveyed disagreed as to whether or not the children knew where to find important family documents such as wills, power of attorney, and health care proxies,” said Fidelity’s experts.

3. Define family roles

family with mother, grandparents, and a baby

Family | Source: iStock

Another area where parents and children were unclear was family roles. Take time to meet and discuss who will be responsible for what. This will help clear up any confusion during tough financial times. “Advanced planning can help define roles and choose when and how different people will be involved. For example, who will have power of attorney or be the executor of your estate? It’s important to consider the personalities of each child, as well as their proximity, relationship with parents, and other nuances that play into long-term decision making,” said Chris McDermott, senior vice president of private wealth management at Fidelity.

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