When Should You Discuss Money Matters With Family?

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The only thing more difficult than financial planning appears to be discussing it with loved ones. Money has long been labeled as a taboo topic among Americans, but families across the nation are struggling when to have detailed conversations about important financial topics.

According to a new study by Fidelity Investments, almost two-thirds of parents and their adult children disagree when to discuss retirement preparedness, eldercare, and estate planning. Parents prefer to wait until they retire to talk about such topics, while children want to hold conversations well before their parents retire or experience health issues. In fact, 40 percent of parents indicate they have not had detailed conversations with family members about covering living expenses in retirement, and another 15 percent have not had any conversations at all.

Unsurprisingly, there is a clear need to hold money discussions as denial runs deep. Fidelity finds that 56 percent of adult children say their parents often worry about financial security, but only 23 percent of parents admit to doing so. Yet 70 percent of parents confess they don’t know exactly how much money they will have to live on in retirement, up from 65 percent just two years ago.

“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. “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.”

When should you discuss money matters with family? The sooner the better. The study finds that earlier and more detailed conversations provide a greater sense of preparedness. More than nine of 10 parents who had in-depth conversations with their children about wills and estate planning say it increased peace of mind. Remember, no detail is too small or unmentionable to discuss. For example, my own father years ago informed me that he purchased his own casket and where to find it upon his death, providing peace of mind for both of us. He has the casket of his choice, and I have one less expense to worry about.

Fidelity also recommends following the “voice not vote” rule when it comes to financial planning with loved ones. While family members should have a role in the planning process, make sure the ultimate decisions made are consistent with the wishes of the parents.

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