Here’s an interesting article coming to us through Time Magazine – fully half of adult children (over age 30) say their parents made (wait for it)… no financial mistakes. That’s right – the Fidelity Intra-Family Generational Finance Study revealed that 47% of children believe their parents (55+) took all the right steps on their way to their current situation. Hmm… yet people on this site want to talk about parents and money issues.
I’ll lean towards my readers on this one – let’s discuss.
Parents and Money Issues
There are many money issues you might face with your parents:
Burying their heads in the sand? Excessive optimism? Excessive pessimism? Avoiding math?
For the record my parents certainly aren’t perfect in the financial aspect of their lives – but, I can certainly tell you they could be a lot worse. To believe that 47% of families somehow did things better than they did requires a suspension of disbelief so absurd I could probably believe every Hollywood release is based on a true story.
That’s right, I’m saying that adult children really are burying their heads in the sand. Let’s turn to EBRI’s 2012 Retirement Confidence Survey – an annual report I watch pretty closely. Turn to the breakdown by ages, especially in the 55+ cohort – to cherry pick a few lines: only 16% of those 55+ believe they have enough saved to live comfortably in retirement, and, more damning, only 18% believe they are doing a good job in saving for retirement.
How do you rectify those two numbers? 47% of adult children are saying their parents have done no wrong, yet only 18% of the parental age range are even claiming they’ve done enough. Now, the wording isn’t even exactly what we’re looking for – saying “you’ve done enough” isn’t the same as saying “you’ve made no missteps”.
How Are Your Parents Doing?
45-49 years old is the peak of the average worker’s earning potential, and the top of his or her financial prowess. That (probably, but why risk it?) means, in essence, your parents aren’t as financially savvy at they were even a few years earlier… parents and money issues don’t so easily clear up past a certain date, they can even get worse.
How can you solve it? You need to talk to your parents about things like their wills, long term care plans, life insurance (especially if they still have a mortgage), and (perhaps most importantly) their investment and savings mix. If you aren’t confident in your abilities? Find them a trusted adviser.
What’s the alternative? Do nothing and pretend that your parents can do no wrong when it comes to finances. That doesn’t seem like a good option.
So, are your still-working parents making only good decisions money-wise? Did your retired parents make perfect money moves?