Whether deserved or not, millennials have a reputation for entitlement. But when it comes to their parents’ finances, the younger cohort may be a lot less selfish than you think.
According to a new study by Edward Jones , the St. Louis-based mega-brokerage, most American millennials, as millennials are also known, care deeply about whether their parents can afford a comfortable retirement. In fact, they emphasize this priority over their own heritage.
The study, which Edward Jones conducted with research firms Age Wave and The Harris Poll , surveyed more than 12,000 adults in the United States and Canada. Among millennial respondents, defined as those aged 27 to 42, a solid majority – 68% – said they worried their parents hadn’t saved enough money for a healthy retirement. And an even larger majority – 83% – said securing that retirement was more important to them than inheriting wealth from their parents.
“This was one of the most surprising findings of our study,” said Lena Haas, head of wealth management advice at Edward Jones. “They said, ‘You know what? We’d rather know that our parents or in-laws are financially secure…than know that they can pass the money on to us. “”
As a generation, Millennials are about to inherit a wealth of history. As baby boomers pass away in the coming decades, experts predict a “great transfer of wealth” to their children of up to $84 trillion by 2045, research firm Cerulli Associates has estimated .
But according to the Edward Jones study, it’s not the top priority for millennials. In fact, they were more concerned about their parents’ retirement than other generations. While 68% of millennials worried their parents didn’t have enough savings, only 57% of Gen Z and 55% of Gen X had the same concern.
Some wealth managers said these findings matched their experience.
“I have several millennial clients who are so concerned about their parents’ retirement that they set up investment accounts for the benefit of their parents,” said Liz Windisch, founder of Aspen Wealth Management in Denver . , Colorado. “This is not a situation where they are concerned about the inheritance, but about the parents meeting their basic needs in retirement.”
For some millennials, however, there may also be an element of self-interest at work. Sixty-one percent of millennial respondents said they worried their parents would “become financially dependent on me” in their old age – a possible consequence of not saving enough. This too was pronounced among millennials – only 42% of Gen Z and 43% of Gen X had the same concern.
So how can baby boomer parents secure the retirement their millennials want for them? Their children made many suggestions: 37% of millennials said they wish their parents would live more frugally, 28% wanted them to reduce their debts, and 26% wanted them to work longer or get back to work .
Haas said she finds these tips amusing and familiar.
“What I found quite ironic was the kind of advice millennials gave their parents,” Haas said. “That’s exactly the kind of advice parents give their children.”
In addition to finances, millennials have also offered their parents advice on their health. Thirty-five percent recommended more physical exercise. Another 35% suggested that their parents “regularly challenge themselves mentally”. Thirty-two percent wanted their parents to spend more quality time with their family, and 31% hoped they would develop new interests and creative hobbies.
Whether or not these parents follow the advice of their children remains to be seen. But what is clear is that millennials have a keen interest in the quality of life of their retired elders — stronger, even, than what they receive in their wills. This is reflected not only in Edward Jones’ study, but in the experience of many financial advisors.
Read more: Millennials seek financial advice sooner: Ameriprise study
“With my millennial clients, our conversations about their parents are almost exclusively about concerns that their parents aren’t ready for retirement expenses,” said Eric Scruggs, the founder of Hark Financial Planning in Stoneham, Massachusetts . “Very few of my clients want to inherit anything from their parents; they would rather have their parents spend the money while they are alive than provide a larger inheritance. »
Steve Branton, senior vice president at Wealthspire Advisors in San Francisco, works with multiple generations of clients from the same families. For him, the idea that millennials would prioritize the finances of their mothers and fathers over their own was no surprise.
“It aligns with my experience working with adults and their parents,” Branton said. “Clients worry not only about whether they will be okay, but also about whether their parents will be okay.”