NEW YORK (MainStreet) The top reason the majority of parents do not discuss their retirement plans with their adult children is that they do not want them to count too much on their future inheritance, according to Fidelity's Intra-Family Generational Finance Study.
The study found that many parents also are not as concerned about their retirement as they should be with 70% who indicate they do not know how much money they will have to live on in retirement.
Adult children also significantly underestimate the value of their parents' estate by more than $300,000. This number more than doubled from just two years ago, when the estimate was off by more than $100,000 on average, the Fidelity study found.
"It's not surprising that parents appear to want to put off discussing money matters with their children as long as possible, especially when it comes to how much of an inheritance they stand to gain," said Lauren Brouhard, senior vice president of personal investing for Fidelity Investments in Boston. "They want their children to learn financial self-reliance."
The top reason cited by their adult children is that it would be upsetting for both parties, according to the study.
"The subject of money has been traditionally considered a private matter and many people feel awkward talking about it," she said.
Parents and adult children need to have conversations about retirement and eldercare planning early and often before any major decisions need to be made. One benefit of discussing money is having greater confidence in the plans chosen with 93% of the parents who have discussions with their children about wills and estate planning say it brought them greater peace of mind and 73% said it would help their children's emotional state of mind as well.
"Adult children also benefit from these conversations as they can learn about their parents' financial status and wishes in the event of an emergency where they may need to step in to execute financial and healthcare decisions on behalf of their parents," Brouhard said.