2021 Report on the Financial Confidence of America’s Seniors & Their Adult Children

· Published: March 09, 2021

How prepared do older Americans feel for this stage of their lives, what are their biggest fiscal concerns as they age, and how do they and their families expect to adjust? As a follow-up on our 2020 research that covered this topic, we surveyed almost 2,000 American adults, including those 65 and older with at least one financially independent adult child and those 65 and younger with at least one retirement-age parent or stepparent.

Here's a summary of our key findings:

  • More than two in three older adults said the COVID-19 pandemic hasn't had an impact on their finances as they prepare for or continue retirement.
  • About 45 percent of all respondents said they weren't concerned about stock market volatility in the wake of the pandemic having a negative impact on older adults' finances, which is considerably higher than the 27 percent who said the same in March 2020.
  • There's a huge divide between older adults and people in their kids' age group over living arrangements in the event they need assistance in retirement. Only 10 percent of those 65 and older said their plan would be to live in the home of their adult child, while more than 30 percent of the younger age group said as much.

Table of Contents

  1. Healthcare Costs Remain Top Concern
  2. Having ‘the Talk' Means Something Else Now
  3. Fewer Older Adults Say They'll Need Help or Want Childrens' Opinions
  4. Ready, Set, Retire?
  5. A Year Later, Does COVID-19 Have Lingering Financial Effects?

1. Healthcare Costs Remain Top Concern

Despite the popularity of the Medicare program, which provides health coverage to retired and disabled Americans, healthcare costs remain the biggest financial worry for those 65 and older, and the percentage of older adults citing that as their primary financial worry remained fairly steady.

Primary financial concern, 65+ individuals, 2020 vs. 2021
Primary concern 2020 2021
Running out of money 22% 20%
Maintaining current lifestyle 24% 23%
Healthcare costs 33% 31%
No financial concerns 17% 24%
Other 4% 3%

The second most common response for older adults in 2021 was that they didn't have any major financial concerns, which represents a substantial increase from 2020, though differences in the composition of the audience between the two survey periods was influential, as our survey group reflected the continued aging of the Baby Boomer generation.

About 10,000 Baby Boomers turn 65 years old on a typical day, and by the end of this decade, the entire generation will be 65 or older. Only the Millennials represent a larger cohort generationally.

In this year's installment, our survey group was more heavily skewed toward older adults who are already retired vs. those who are working or are unemployed but not retired. Retired respondents were far more likely than the other groups to say they don't have any major financial concerns, with about one in four of them picking that response.

Primary financial concern, 65+ individuals, by employment status
Primary concern Retired Unemployed Employed full-time Employed part-time
Running out of money 19% 24% 20% 23%
Maintaining current lifestyle 20% 35% 30% 33%
Healthcare costs 31% 35% 31% 25%
No financial concerns 27% 6% 17% 15%
Other 3% 0% 2% 3%

It's also worth noting here that our 2020 survey was conducted in early March, before COVID-related lockdowns began but after the virus became the leading topic of concern in the U.S. and the world. So, it's also likely that some respondents' virus fears impacted their perceptions of their own finances.

Grown children of retired or near-retirement-age adults had concerns similar to those in their parents' age group, and by an identical percentage (31 percent), they rated healthcare costs as their chief concern when it comes to their parents' financial status. Younger respondents were also more likely to say they don't have major concerns related to their parents' finances.

Primary financial concern, 65+ individuals vs. adult children
Concern 65+ individuals Adult children
Running out of money 20% 21%
Maintaining current lifestyle 23% 20%
Healthcare costs 31% 31%
No financial concerns 24% 27%
Other 3% 1%

While male and female respondents in the older age group were equally likely to cite healthcare costs as their primary financial concern (31 percent) as they head into retirement, women were far more concerned about running out of money (25 percent vs. 14 percent). Similarly, men were much more likely to say they don't have any big financial fears as they age (27 percent vs. 21 percent). Gender-line differences were about the same as last year's survey.

Primary financial concern, 65+ individuals by gender
Concern Women Men
Running out of money 25% 14%
Maintaining current lifestyle 21% 25%
Healthcare costs 31% 31%
No financial concerns 21% 27%
Other 2% 3%

Another trend that continued from last year (and which should come as no surprise) is that for older adults with higher levels of household income, falling short on cash is the least of their concerns. Last year, about 13 percent of those with household income in excess of $200,000 said their primary financial concern was running out of money, while nearly one-third of those with income below $50,000 said the same. (Learn more about how older adults are handling debt.)

This year, wealthy individuals were far more likely (44 percent) to say they don't have any major financial worries, while only 19 percent of the poorest respondents said the same, which is similar to the divide among respondents in 2020.

2. Having ‘the Talk' Means Something Else Now

Our 2021 findings continue to indicate that younger adults with retirement-age parents may be uncomfortable discussing their parents' finances with them but that those 65 and older don't share the same discomfort.

Last year and this year, a combined 69 percent of older adults said they were “very comfortable” or “comfortable” discussing their retirement finances with their grown children. This year, only about 57 percent of the under-65 group said the same. This represents a slight decline from the 2020 survey, when 59 percent of those with parents nearing retirement said they'd be comfortable with a conversation like that.

By the same token, both this year and last year, 17 percent of those under 65 said they'd be “very uncomfortable” or “uncomfortable” having this type of talk with their parents, while only nine percent of the older age group said the same in 2021.

Comfort level discussing retirement finances, 65+ individuals and adult children
Level 65+ individuals Adult children
Very comfortable 37% 27%
Comfortable 32% 30%
Somewhat comfortable 22% 27%
Uncomfortable 6% 13%
Very uncomfortable 3% 4%

This year's survey found more uncertainty when it comes to making firm plans, such as designating someone to have power of attorney in legal or financial matters. In our first installment of this survey, about 11 percent of older adults said they were uncertain about giving someone else power of attorney, and that rose to 17 percent this year. Still, about two-thirds of those near retirement age said they would authorize someone to have power of attorney.

Plans for power of attorney, 65+ individuals and adult children
Plan 65+ individuals Adult children
Yes 65% 54%
No 7% 10%
Unsure 17% 23%
Already granted power to adult child 8% 12%
Already granted power to someone else 3% 1%

3. Fewer Older Adults Say They'll Need Financial Help or Want Childrens' Opinions

Almost 70 percent of those 65 and older said they did not believe they'd need financial assistance from their grown children in retirement, but about a quarter of them remain uncertain. These figures are similar to 2020, but the share of those indicating they won't need their kids' help expanded from 65 percent last year.

Percentage of 65+ adults who believe they'll need financial help from adult children
No 69%
Yes 7%
Unsure 24%

For older adults who do believe they'll need financial assistance from their adult children, running out of money was their primary financial concern, followed by healthcare costs, and maintaining their current lifestyle. This order is unchanged from 2020, though the percentages recorded last year were quite different, which is most likely related to differences in sample sizes.

No area created bigger differences between younger adults and older adults than the living situation of older adults in retirement if assistance is needed, and this continued a trend from the 2020 survey. This year as last year, both groups were most likely to indicate they expected they or their parents would continue living in their own homes with care services as needed, but this feeling was far stronger for older adults. (Thinking about a move before retirement? Not all states are equal on that score.)

Grown children of older parents were about three times more likely than those in their parents' age group to say they would expect their parents to move in with them (or one of their siblings), while they were slightly less likely to indicate their approval of their parents living a senior-care setup.

Housing plans if assistance is needed, 65+ individuals vs. adult children
Plan 65+ individuals Adult children
Home w/care services 62% 38%
Adult child's home 10% 31%
Another relative's home 1% 8%
Senior living* 22% 20%
Other 5% 1%

Current levels of financial confidence were also predictive of older adults' plans for their future living arrangements if they need assistance. While only 10 percent of people 65 and older said they looked at their children's homes as their potential future residence if they need assistance, that rose to about 38 percent for those whose biggest fear in retirement is running out of money.

Those who reported having no major financial fears were the group most likely to indicate they planned to live in a senior-living residence like assisted living or a nursing home.

Housing plans if assistance is needed, 65+ individuals by primary financial concern
Concern Senior living Adult child's home Home
Running out of money 18% 38% 17%
Maintaining current lifestyle 21% 27% 23%
Healthcare costs 29% 22% 33%
No financial concerns 30% 14% 24%
Other 2% 0% 3%

While older adults overall are less receptive to the prospect of living in their child's home, they're also not enthusiastic about their grown kids being involved in deciding their housing situation — and respondents with parents near retirement age are eager to be involved.

Opinions on involvement of adult children in housing decision-making, 65+ individuals vs. adult children
Level 65+ individuals Adult children
Very involved 9% 30%
Involved 19% 27%
Somewhat involved 41% 31%
Not involved 31% 12%

These figures were similar to what our survey found in 2020, though older adults were much more likely to say their children shouldn't be involved in these decisions (31 percent in 2021 vs. 21 percent in 2020), though sample size differences could impact results.

4. Ready, Set, Retire?

Few respondents who are at or near retirement age say they're not at all ready for retirement, which is good, since they don't have all that long to get ready. Our survey didn't find statistically significant differences from last year's results when it comes to how well-prepared older adults are for retirement.

Perceptions of retirement preparedness, 65+ individuals
Very prepared 28%
Prepared 35%
Somewhat prepared 24%
Unprepared 8%
Very unprepared 5%

Grown children of those 65 and older were slightly more likely to highly overrate the retirement preparedness of their parents, as 31 percent rated their parents as “very prepared.” This is in keeping with our results from 2020.

Our survey found the gender gap extends to preparedness for retirement, with about 68 percent of men 65 and older saying they are “very prepared” or “prepared,” compared with 59 percent of women saying the same. Similarly, men are much less likely to report not being ready at all.

Perceptions of retirement preparedness, 65+ individuals by gender
Level Women Men
Very prepared 24% 32%
Prepared 35% 36%
Somewhat prepared 26% 22%
Unprepared 9% 7%
Very unprepared 6% 3%

Meeting with a financial adviser was strongly connected to feeling more prepared for retirement, a trend that continued from the previous year's survey. About eight percent of those who hadn't met with a financial adviser about their readiness for retirement said they felt “very unprepared,” which fell to just one percent for those who've gotten professional financial help for retirement.

Perceptions of preparedness by meeting with a financial adviser, 65+ individuals
Preparedness Yes No
Very prepared 36% 18%
Prepared 41% 28%
Somewhat prepared 19% 31%
Unprepared 3% 15%
Very unprepared 1% 8%

5. A Year Later, Does COVID-19 Have Lingering Financial Effects?

Nearly 70 percent of those at or near retirement age said the COVID-19 pandemic has had no discernible impact on their financial status, though their adult children were more likely to believe the crisis had a net benefit for their parents financially. In fact, the younger age group was about three times more likely to report the pandemic as being “very positive” for their parents' finances.

COVID-19 impact on parents' finances, 65+ individuals vs. adult children
Impact 65+ individuals Adult children
Very positive 2% 6%
Positive 7% 9%
Neutral or no impact 69% 56%
Negative 18% 18%
Very negative 4% 5%

Adult children of aging parents were also slightly more likely to be concerned about their parents' finances because of the volatility in the stock market over the past year, including pandemic-related effects as well as events like the Gamestop stock controversy. About 26 percent of adult children said they were “very concerned” or “concerned” for their parents over stock market upheaval, but they were even more concerned about their own finances, with 31 percent being “very concerned” or “concerned” about their bank accounts thanks to the impact of the stock market.

Level of concern over impact of stock market volatility on parents' finances, 65+ individuals vs. adult children
Concern level 65+ individuals Adult children
Very concerned 7% 12%
Concerned 15% 14%
Somewhat concerned 37% 28%
Not so concerned 30% 31%
Not at all concerned 12% 16%

Our 2020 surveys found that both age groups were much more concerned about stock market turmoil in the early days of the pandemic and that fears of the stock market wrecking retirees' finances have subsided.

Percentage-point change in level of concern over stock market volatility, 65+ individuals vs adult children
Concern level 65+ individuals Adult children
Very concerned -12 -7
Concerned -8 -11
Somewhat concerned 7 1
Not so concerned 12 14
Not at all concerned 2 4

Both groups became far less fearful over stock market upheaval over the past year, and this most likely reflects the fragility of the economy as a whole in the early stages of the pandemic. We first asked about the stock markets' effects on finances during the week of March 22, 2020, following some of the worst days in the history of Dow Jones Industrial Average.

This included the largest single-day drop of the crisis, March 16, when the Dow shed about 13 percent of its value. So, it's understandable that in the darkest days of the crisis from a stock market perspective, our respondents were at their most pessimistic.

In March 2020, an average of 43 percent of all respondents said the recent stock market volatility had them “very concerned” or “concerned” about their finances, or their parents' finances. Today, that number is only 24 percent.

Conclusion

For those in a financial state to enjoy it, retirement can be one of life's most rewarding periods. But whether it's ensuring quality care in your later years or simply having enough money to do the things you want, adequate retirement preparation is key, and our research indicates that too few families are having open, honest conversations about what's next for their oldest members.

Methodology

We surveyed a random sample of 1,181 Americans 65 and older with at least one financially independent adult child about how prepared they are for retirement, what fears they have about that stage of life, and how involved they want their adult children to be in making decisions about their finances. We also surveyed a random sample of 763 Americans under 65 with at least one parent or stepparent over the age of 65; we asked that group the same questions but about their perception of their parents' preparedness for retirement. Our surveys were conducted in February 2021. We conducted similar surveys last year before and during the early days of the COVID-19 pandemic (February and March 2020), and some of those results were compared to the findings of the most recent surveys.