Wells Fargo Discovers Vast Differences Between Baby Boomers and Their Adult Children on Finances
A new survey of Baby Boomers and their financial dilemmas has been released by Wells Fargo. It reveals that many older Americans are probably still not fully prepared for life after work, and their adult children have different views on how to cope with their financial needs.
The investigation found that there are roughly 10,000 Baby Boomers reaching age 65 each day. That translates into roughly 3.6 million per year. Despite the mass movement into retirement, only about one third of these retirees have actually discussed their financial situation with their adult children. Wells Fargo believes that communication is the first step to better management of financial issues during retirement and expressed concern over the poor communication for financial planning.
Wells Fargo’s research also discovered that approximately 20% of Americans over the age of 65 have been the victim of some type of financial fraud. Nevertheless, only 10% believe the same could happen to them. Obviously, better education is needed as older adults enter into the last phase of their lives.
Besides speaking to Baby Boomers, Wells Fargo also spoke with their adult children or adults old enough to be their children. The bank found a wide gulf between the two groups on what the major problems in retirement will be and how they should be solved.
For example, only 12% of older adults who were interviewed believed that they needed assistance with their financial lives during retirement. However, 43% of the adult children surveyed believed that their parents would need help.
Besides managing finances, other disagreements abounded. For instance, only 36% of Baby Boomers anticipated needing help with transportation during retirement. But 64% of their children felt that they would need help in this area.
Obtaining medical care was another area where Wells Fargo discovered a large gap on perceptions between older adults and their children. Baby Boomers did not show a lot of concern over the possibility of needing help finding medical care; only 22% expressed concern on this issue. But nearly half of their children thought their parents would need assistance here.
As far as expectations about children helping their parents during retirement, Wells Fargo noticed even more differences. Over 50% of Baby Boomers said they expect their children to help them during retirement based on sheer moral values. Their adult children, however, didn’t seem to hold the same ethical sentiment, as only 10% believed they were obligated morally to assist their parents during this time.
Most adult children (over 80%) said that they wanted their parents to prepare for retirement so that they wouldn’t have to handle the burden. The most common reason cited by adult children for not wanting to intervene was living far from their parents.
Exactly who should control assets of Baby Boomers was another issue Wells Fargo looked at. A sizeable percentage (70%) of retirees said they wanted full control of their finances, including if and when they make errors. Over 65% of their children said they agreed with this viewpoint. About the same number said they didn’t want to have to take over their parents’ finances.
The Wells Fargo investigation also found that only 40% of Baby Boomers have four of the major legal documents that retirees should have. These are the advance healthcare directive, last will and testament, power of attorney for healthcare, and power of attorney for financial matters.
Even more shocking was the fact that most older Americans haven’t discussed these topics with their adult children or other family members. Only 32% have talked about plans for inheritance with their children, for example. About a third of the children surveyed said they didn’t know if their parents even had such legal documents. Some children knew their parents had these safeguards in place, but didn’t know where they were stored.
Although the situation looks rather unsettling at this time, perhaps there is a lesson in the details. Better preparation before retirement, and better communication, can help make the road into retirement, and life after work in general, easier and more rewarding.