Affluent Parents Expect to Spend as Much as $1 Million Over a Child’s Lifetime

Even though many affluent parents in the study planned to stop supporting their children after college, 71% of respondents believed their child expected or would expect them to pay for big-ticket purchases, such as a car or a wedding.

In fact, 68% said they would pay significantly more for a wedding than what they believed their child expected, and 51% said the same about a car purchase.

At the same time, affluent parents remained focused on planning and preparing for their own retirement. Two-thirds said they would choose to spend their money on themselves in retirement rather than pass on an inheritance to their child.

Moreover, only 19% of affluent parents said they expected to have to change their retirement plans in order to support their children. Millennial parents were the exception, with 66% anticipating a need to make an adjustment.

As for education specifically, 54% of respondents prioritized saving for their own retirement versus their child’s education. Again, millennial parents bucked the trend, as 64% put their child’s college cost ahead of their own retirement.

Legacy Planning

Seventy-two percent of affluent parents said they expected their children to be as wealthy as or wealthier than themselves. To lay the groundwork for the future, 77% of respondents said they had discussed saving and investing with their children. They had also talked about these topics:

• Earning and working hard – 75%
• Budgeting and spending – 70%
• The family’s net worth – 38%
• Philanthropy and giving –36%

Such discussions, Personal Capital suggested, may be why 85% of affluent parents did not consider their child a risk to their own financial wellness, such as being overly financially dependent on them or irresponsible with money.

Nearly all affluent parents in the study said they planned to leave something for their children. Four in 10 planned to leave assets to their grandchildren, and a third planned to leave a bequest to charity.

Study participants reported using a variety of financial products to make their money work for them and to create a financial legacy for their children. Seventy-four percent said they were invested in the stock market. Eighty-six percent used checking accounts, and 76% Roth IRAs/IRAs. And although 72% said they had savings accounts, only 41% had a high-yield one.

“While affluent Americans are spreading their wealth across several different investment vehicles, they are not necessarily managing their cash properly,” Brownstein said. “Every person, regardless of wealth, should have a savings account for emergencies, and ideally those should be high-yield savings accounts so investors can earn on the cash they’re holding onto and achieve their long-term goals.”