For the vast majority of family financial decision makers, children come before they do; paying for the kids’ education ranks far above saving for future medical expenses or retirement.
As a result, only three in 10 American parents are confident that they are adequately preparing themselves financially for retirement. These are among some of the key findings released in the second nationwide study in Massachusetts Mutual Life Insurance Company’s State of the American Family series.
“As a nation, we are becoming incredibly diverse in terms of age, ethnicity, attitudes and experiences; you no longer can put a face on America, because there are so many different faces,” said John Chandler, senior vice president and chief marketing officer, MassMutual.
“The State of the American Family research platform helps foster a deep understanding of today’s diverse families, trends that may shape them in the coming decade and factors that affect their dynamics and interactions on matters financial and otherwise.”
Despite parents’ insistence on paying for their children’s education, the study found that half of those who set this as a priority say they won’t have the money needed to fund a future college education, nor do they know how much they need to save.
“When I talk to families about their financial planning needs, we cover plans to pay for children’s college by asking how much of their child’s education they want to cover, what percentage of their income they want to save for it, and whether or not they think their children will receive any financial aid,” explained Kevin Paasch, a MassMutual assistant general agent and sales manager at Commonwealth Financial Partners in Virginia Beach, Va.
“Then when we discuss retirement, I ask if they plan to get any financial aid to help with retirement. I get puzzled looks, but the point is made, and we start reprioritizing their financial goals.”
“Planning for your children’s education is a critical need, but prioritizing this above your own financial future may be risky,” warned Paasch.
“It’s clear that today’s American family, regardless of how they are defined, is struggling with reaching their long-term financial goals and managing their finances day-to-day,” said Chandler.
“As a father of two teenage sons at a time when the country slowly climbs out of a deep recession, I feel a personal and professional responsibility to help people take that first step toward making smart financial decisions for themselves and their families.”
Other key themes of the research include:
It starts with the foundation