Most 401k savers wish someone had talked to them earlier about saving for retirement and other financial topics, a recent study revealed.
According to a survey of investors by Capital Group, 45 percent of females and 33 percent of males would’ve liked to receive advice about 401ks and other retirement-related matters at a younger age. Many say it would’ve been nice to learn about debt, credit cards, living within your means and investing, too.
Instead of letting the next generation “live and learn,” many respondents are making a point to discuss money matters with their kids.
“Millennial and Gen X parents are paying forward lessons learned about finances and investing by talking about money and saving with their children,” Heather Lord, senior vice president and head of strategy and innovation at Capital Group, said in a statement. “Tips such as starting to save early and regularly and taking advantage of employers’ 401k match can go a long way toward establishing a strong financial future. These are conversations worth having that will impact how younger Americans invest for their futures.”
Data show moms are more likely than dads to do the talking, even though more fathers (79 percent) than mothers (51 percent) say they are the primary investment decision-maker in the house.
Broken down by gender, parents are covering topics including:
- having good credit (76 percent of mothers versus 62 percent of fathers);
- starting to save early (70 percent of mothers, 64 percent of fathers);
- saving for retirement (69 percent of mothers, 65 percent of fathers); and
- paying off loans (50 percent of mothers, 42 percent of fathers).
Dads, however, are on par with moms when it comes to the subjects of investing and buying a car.
Parents consider the top five most valuable pieces of financial advice to be living within your means; starting to save early and regularly; taking advantage of employers’ 401k match; paying off credit cards and managing credit; and creating a budget based on percentage of income.
And when is an appropriate age to pass along this financial advice?
Interestingly, responses varied by generation. Around 40 percent of Millennial and Gen X parents think it’s best to teach kids to start saving when they are 12 years old or younger. Only 22 percent of Baby Boomers agree. More Boomers say it’s a lifelong process (28 percent).
Parents from all generations agree that teenagers should be taught about maintaining good credit, buying a car, using credit cards, avoiding debt and saving for college.
But retirement and investment conversations are typically reserved for older children, according to the survey results. While Millennials and Gen Xers think that these topics should be discussed when children are in their teens and 20s, Baby Boomers say they talked about them when their kids were in their 20s and 30s.
“Parents’ own childhood financial stresses may also shape the way they approach financial discussions,” Capital Group noted in its report.
“Respondents who grew up in a financially unstable home are more likely to talk about financial topics across the board, but especially about making a budget (66 percent compared to 54 percent who grew up in a financially stable home) and paying off loans (57 percent versus 43 percent, respectively).”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
