A top concern of Americans is not having enough money for retirement. We asked more than 1,300 seniors to share their perspectives on personal finances, retirement and discussing these matters with their children. We also asked more than 1,300 financially independent adult children of seniors the same questions about their parents.
SeniorLiving.org Survey on American Senior Financial Confidence
We originally conducted our research in February of this year, prior to the COVID-19 pandemic influencing American behavior and impacting stock markets. We conducted follow-up research during the week of March 22nd, which provides an interesting perspective on preparedness, security and confidence.
Here's a summary of our key findings:
- The recent stock market gyrations are causing concern for seniors. Forty-three percent of seniors report being “concerned” or “very concerned” about their finances. Adult children of seniors are on the same page. Forty-three percent of them are “concerned” or “very concerned” for their parents.
- Most seniors and their children report being “comfortable” or “very comfortable” discussing finances. For both retirement-age adults and their grown children, the cost of healthcare is the chief financial worry.
- One disconnect between seniors and their adult children is financial assistance. Two-thirds of seniors do not expect to need financial support from their adult children. Just one-third of adult children feel the same way.
- Another disconnect is with living arrangements. Seniors are much less likely to want their children involved in a decision, and about 8 times more likely than those in their children's age group to say they plan to live in an assisted living facility or nursing home if necessary (32 percent to 4 percent).
Table of Contents
- COVID-19 and Recent Stock Market Gyrations
- Financial Concerns Of Seniors
- Discussing Finances With Your Children (or Parents)
- Will Seniors Need Financial Support from Children?
- The Big Disconnect: Living Arrangements
- Retirement Preparedness
1. COVID-19 and Recent Stock Market Gyrations
Many seniors and their adult children are talking about personal finances during the COVID-19 pandemic and feel similarly about financial security. Fifty percent of seniors report talking to their children about their finances in the past 2-3 weeks. This is echoed by adult children of seniors, half of whom report talking to their parents.
Seniors report similar concerns about their financial security in recent weeks as adult children do of their senior parents, with 43 percent of both groups reporting being “concerned” or “very concerned”.
Despite having a longer time-horizon for investments and saving for retirement, adult children of seniors are more concerned about their own personal finances, with 49 percent indicating they are “concerned” or “very concerned” with their own. Seniors with adult children are also more concerned with their kids, with 45 percent being “concerned” or “very concerned”.
2. Types of Financial Concerns
We asked seniors their greatest financial concerns in February, and affording healthcare was number one. Grown children of seniors had the same concern about their parents.
Both groups reported similar concerns and rankings, with children more concerned about “running out of money” while more seniors expressed this as “maintaining the same lifestyle.”
Among 65+ adults who chose the “other” option as their primary fear, the most common concerns they listed were the costs of long-term care and leaving enough funds for their survivors, whether spouses or children.
Men in the 65-and-up age bracket have much less concern about having ample funds as well as finances in general, with men being far more likely to cite no financial concerns (19.6% vs. 12.4%) and women being more likely to say running out of money is their primary financial fear (25.9% vs. 19.1%).
As one might expect, financial fears depend largely on income, and those on the lower end of the scale have more urgent concerns like paying for medical care and ensuring they have enough money, while higher-income individuals who do have financial concerns fear not being able to maintain their current lifestyle. Those with income in excess of $200,000 per year were nearly three times more likely to report not having any financial concerns than those earning under $50,000.
3. Discussing Finances With Your Children (or Parents)
For adult children of people at or near retirement age, our survey found little reason for fear over discussing financial matters with their parents — but adult children were far more likely than their parents' group to report discomfort with the idea. In fact, only about 1 in 10 people in the 65-and-older group said they were very or somewhat uncomfortable with the idea of discussing their finances with their adult children, while more than 16% of the adult children's group said the same. Adult children were also far less likely to report being very comfortable with talking about money.
Our survey found a similar disconnect between retirement-age people and their adult children when it comes to giving their children (or someone else) power of attorney, or the authority to act on their behalf in legal or financial matters. While majorities of both groups indicated that the plan would be to authorize power of attorney, those in the older age group were far more likely to say so (69.9% vs. 57.9%) and adult children were about twice as likely than people in their parents' age group to report being unsure about their plans.
4. Will Seniors Need Financial Support from Children?
How about seniors receiving financial assistance from their children? Two-thirds of seniors expect to not need financial help, and just 7 percent expect to need help (the rest are unsure).
This is quite a different answer than their children provide. Just one-third of adult children expect their parents to not need financial help, and 39 percent do expect to provide financial support or already do provide it.
5. The Big Disconnect: Living Arrangements
Our research finds divergences between older adults and their grown children across a range of issues, from discussing finances to perceptions of retirement preparedness, but the living situation of older adults proved to be the biggest diverging point of all. While both groups were most likely to say they'd continue living in their homes, the two groups don't see eye-to-eye about much else when it comes to living arrangements.
The single biggest divide was found in plans for moving to senior living, such as an assisted living facility or a nursing home, an arrangement that nearly one-third of older adults are planning for but which only 4.4% of their adult children are. Similarly, adult children were nearly three times as likely to say they were planning for their parents to live with them if they need assistance during retirement (20.5% vs. 7.7%).
Finally, while our research found that most older adults said they're comfortable discussing their financial situation with their grown children, they are much less likely to say they're comfortable with their children taking an active role in decision-making about housing. Nearly two-thirds of the adult children's group said they wanted to be very involved in making these decisions, only about 37.5% of their parents' group agreed.
6. Retirement Preparedness
Most older adults believe they are prepared to tackle the challenges of retirement, though their grown children may not agree. However, knowing that the adult children of those 65 and older are largely uncomfortable talking to their parents about finances, it's likely that adult children aren't all that well-informed about where their parents stand in retirement planning.
About two-thirds of individuals 65 and older say they are prepared for retirement, but a troublingly large group (more than 1 in 10) say they are unprepared or very unprepared for a life without income from their jobs. Considering that this group is at most two years away from reaching 67, the age at which most people can claim their full Social Security benefit, this doesn't bode well for potentially thousands of older adults.
Similarly to our findings on the gender gap when it comes to major financial fears, men 65 and older were considerably more likely than women in the age group to report being very prepared for retirement, by a double-digit margin, while women 65 and older were almost twice as likely to say they feel very unprepared for this stage of life.
Of course, income-based differences exist as with fears over financial matters, but they are especially stark here. Among respondents who make less than $50,000, only about 13% say they are very prepared, while nearly 60% of high-income individuals said the same. And more than 1 in 4 low-income respondents report being unprepared for retirement, which is more than double the rate in the 65-and-older group overall.
Consulting with a finance professional appears to have a considerable impact on the ease with which people think about retirement. In fact, having met with a financial adviser reduced by half the percentage of people 65 and older who feel unprepared for retirement.
About the Data
We surveyed more than 1,300 American adults 65 and older and asked about their financial preparedness for retirement, what fears they have about retirement, their opinions about how involved they want their adult children to be in their retirement planning decisions and other issues. Similarly, we surveyed more than 1,300 Americans under 65 with at least one living parent or stepparent who identified as being financially independent. We asked them the same questions but about their perceptions of their parents' readiness. The first section comes from surveys conducted the week of March 23rd. Subsequent sections come from surveys conducted in February 2020.