There is a divergence on expectations for multigenerational living between parents and their children–and not in the way you might expect. Only 10% of seniors expect to move into their children’s homes if they need assistance in old age, but 31% of adult children expect their parents to move in if they eventually need help, according to a new survey, indicating that many seniors and their kids need to have a discussion about the future.
Meanwhile, a report from the Government Accountability Office calls for increased cybersecurity measures to protect the personal information of retirement savers, and a survey from Fidelity Investments reveals that many savers lack some essential information about retirement planning.
Here’s the latest Barron’s roundup of retirement-related news and research.
Survey: Seniors Expect to Remain in Homes
When asked about their living arrangements in the event that they need a caregiver, 62% of seniors say they expect to remain in their own homes and use professional care services, according to a survey from SeniorLiving.org, which offers free educational resources to seniors and their families. An additional 22% expect to move into a senior-living facility, while only 10% expect to move in with their kids.
Adults with senior parents have different expectations, with 38% expecting their parents to remain at home with help from professionals, 31% expecting parents to move in with them, and 20% saying their parents will move into a senior-living home.
Ryan McGonagill, director of industry research at SeniorLiving.org, says there are many reasons for the disconnect between seniors and their kids about the future, including seniors’ desire to remain independent and avoid becoming a burden on their children, and adult children wanting to have their parents closer to them so they can monitor their well-being.
“It can be a delicate balance as a parent ages and the relationship dynamic starts to shift,” McGonagill says. “The data show that it’s probably a topic that you should broach sensitively because older adults, and rightfully so, want to remain in control of their decisions as they age.”
In February, SeniorLiving.org surveyed 1,181 Americans ages 65 and older with at least one financially independent adult child, and 763 younger Americans with at least one parent older than 65. The results reveal that most seniors are fairly confident about their finances.
Only 7% of seniors expect to need financial help from their children, while 69% don’t expect to need help and 24% are unsure. In addition, 63% of seniors say they’re either very prepared or prepared for retirement, while 24% say they’re somewhat prepared, 8% say they’re unprepared, and 5% say they’re very unprepared.
That confidence likely is one of the reasons 72% of seniors want their adult children to be only somewhat involved or not involved in deciding their future housing situation. Conversely, among adult children, 57% want to be either very involved or involved in those decisions.
McGonagill says he hopes the survey results encourage parents and their adult children to have frank conversations about seniors’ finances and what will happen if they need care. “I think it’s important to know where your parents stand as they get older in terms of retirement financial security so that if a time comes when they do need additional support, you can prepare for that sooner rather than later,” he says.
Labor Department Urged to Clarify 401(k) Cybersecurity Responsibilities
The Government Accountability Office has made two recommendations to the Labor Department aimed at increasing cybersecurity for employer-sponsored retirement plans such as 401(k)s, calling on the agency to formally state whether it’s a fiduciary’s responsibility to mitigate cybersecurity risks in these plans and to establish minimum expectations for addressing cybersecurity risks in retirement plans.
In its report, the GAO says plan sponsors and service providers – such as record keepers, third-party administrators, custodians, and payroll providers – share a wealth of sensitive information about plan participants, including name, Social Security number, date of birth, address, username/password, retirement account numbers, and bank account numbers.
The sharing and storing of that information represents a significant challenge due to the threat of cyberattacks, the GAO said. In 2018, about 106 million American workers participated in 401(k) or similar employer-sponsored retirement plans, with assets totaling $6.3 trillion, according to the GAO.
The Labor Department hasn’t clarified whether plan administrators are responsible for mitigating cybersecurity risks, but 21 out of 22 stakeholders interviewed by GAO expressed the view that cybersecurity is a fiduciary duty. The GAO said the Labor Department intends to issue guidance addressing cybersecurity for retirement plans but offered no timeline for publication.
Survey: Many Savers Stumped By Retirement Questions
Only 17% of adults can identify the full retirement age for Social Security, and 72% believe the stock market has had more down years than positive years over the past three decades, according to a new survey from Fidelity Investments, suggesting that many retirement savers lack some important information.
Retirees may begin collecting Social Security benefits at age 62, but anyone who collects before the full retirement age of 67 will receive less monthly income; retirees who wait until the maximum, age 70, can collect even more. As for the stock market, investors have seen a positive annual return in 26 of the past 35 years.
Other findings from the survey include:
● Most respondents underestimate out-of-pocket health-care costs in retirement, with 37% saying a typical couple retiring at age 65 can expect to spend $50,000 to $100,000. According to Fidelity, the real figure is $295,000.
● Most savers expect to spend far more in retirement each year than Fidelity’s suggested rate of 4% to 6% of total retirement assets. In the survey, 28% said financial advisors would recommend a withdrawal rate of 10% to 15%, which likely would deplete their assets much too quickly.
The results are based on an online survey in February of 1,204 adults who make financial decisions in their households and aren’t retired. Respondents had at least one investment account, and those ages 34 and older had at least $100,000 in investable assets.
Write to retirement@barrons.com
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