Adult children have a much more favorable view of their parents' handling of money than parents do of their children’s financial acumen, says a new study by Fidelity Investments.
Nearly half of adult children surveyed by the company (47 percent) say their parents have not made any mistakes financially, according to Fidelity's Intra-Family Generational Finance Study. Only one-quarter (24 percent) of adult children say their parents did not save for retirement soon enough and even fewer (22 percent) say their parents saved money in the wrong type of accounts.
“On the other hand, parents of adult children were quicker to point out the errors their children had made, including racking up credit card debt (42 percent), followed by not saving for retirement early enough (38 percent) and not building a large enough emergency fund (36 percent),” says Fidelity.
To qualify for the study, parents had to be at least 55 years of age, have children over 30 years of age, and have at least $100,000 in investable assets. The adult children had to be 30 years of age and have $10,000 saved.
Saving for retirement is the top issue for the adult children, with 86 percent listing it as their top issue. Paying off the mortgage (62 percent) and saving for a child’s education (44 percent) were next.
The parents surveyed, many of whom are already in retirement, listed saving for retirement (38 percent) or for a grandchild’s education (28 percent) as their top priorities. Nearly a third (30 percent) say they have no financial issues.
“Financial education is so important and should begin in the home at a young age when parents and children can have conversations about basic savings habits,” says Kathleen A. Murphy, president of personal investing at Fidelity Investments.
“Parents can really help children by sharing with them how they are preparing for their retirement or saving for a child’s college education,” she says.
Having these conversations earlier can provide a better foundation for the conversations that will occur years later as parents transition into retirement, Fidelity says. This is especially important in light of the volatile market conditions children saw in the last five years and the impact it may have had on their views on saving and investing.