Conversations and Confidence Regarding Key Financial Goals Elude Many American Families

Americans’ confidence in achieving a secure retirement and their optimism about the country’s financial future have declined significantly during the past five years. Despite their concerns, many people are failing to discuss key financial issues with their families, according to research released today by Ameriprise Financial (NYSE:AMP). The Money Across Generations IISM study offers an in-depth look across three generations of Americans – baby boomers, their adult children and their aging parents – to reveal how the changing financial needs and attitudes of each generation have altered their relationship with money and with each other.

In the spring of 2007, when the first Money Across Generations® study was conducted, the Dow Jones industrial average had just broken 13,000 for the first time and the U.S. unemployment rate rested at 4.5%.

“Five years later, the financial and emotional scars of the recession continue to linger, casting a cloud of uncertainty over generations of Americans,” says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “Consumers have real concerns about job security, investment returns and the future of entitlement programs at a time when they’re also seeing the price of gasoline, consumer goods and health care continue to rise. For many, it feels like the perfect storm.”

Boomers’ optimism and confidence in reaching financial goals has plummeted

The downturn has had an especially significant impact on baby boomers, a generation that was once viewed as the embodiment of optimism and affluence. Today, about half (49%) of boomers say they are optimistic about the financial future of the United States, down from two-thirds (64%) of those surveyed in 2007. The downturn has also had a long-lasting and very personal impact, with only 17% of boomers reporting they are currently very optimistic about their own financial future – a significant decline from 2007 when 39% reported the same.

This skepticism has impacted boomers’ confidence in reaching specific financial goals, including those they are most likely to rate as very important: assuring a secure life for themselves and their family (80% very important) and having enough money to continue their lifestyle after they retire (71%).

The number of boomers who report feeling very confident about their ability to achieve the following goals has declined significantly since 2007:

• Assure a financially secure future for themselves and their family (33% vs. 51%)
• Continue their current lifestyle in retirement (27% vs. 44%)
• Help their children or grandchildren pay for their education (24% vs. 29%)
• Assure a financially secure life for their parents (19% vs. 33%)
• Support a charity or cause that’s important to them (18% vs. 29%)
• Preserve wealth to leave to their children (16% vs. 28%)

Financial fears are echoed by boomers’ children and parents

Boomers’ family members are also concerned about them: 55% of their adult children and 42% of their parents worry about their boomer relatives’ ability to achieve a financially secure retirement.

These fears are not isolated to the boomer generation. Despite their relative youth, boomers’ children (primarily members of Gen Y and Gen X) also report significant declines in their perceived ability to reach key financial goals. The number of those who say they are very confident they will be able to reach the following goals has dropped dramatically:

• Help their children pay for their education (25% vs. 49%)
• Assure a financially secure life for themselves and their family (37% vs. 58%)
• Be able to continue their lifestyle after they retire (23% vs. 45%)

Boomers also express concerns regarding their adult children. More than half of boomers (55%) say they worry that their children will not have enough financial resources to achieve a secure retirement. They are also concerned that younger generations do not understand what it takes to prepare for retirement (47%) and that their children’s financial situation will prohibit them from having the same opportunities they’ve enjoyed (45%).

Boomers’ parents are also feeling financial pressure, but to a slightly lesser degree. The largest decline is seen in the number who believe they will be able to support a charity or cause that’s important to them (18% vs. 34%).

Families are discussing money matters, but conversations are missing the mark

Boomers are much more likely to report that they regularly discuss money matters with their family than they were in 2007 (50% vs. 39%), but these conversations are only scratching the surface. Four-in-ten boomers (41%) admit they haven’t adequately discussed their current financial situation with their children and one-quarter (27%) say they rarely or never discuss retirement. Perhaps even more concerning, 37% of their parents do not feel they’ve adequately discussed their financial situation with their boomer children – a number that has remained relatively unchanged since 2007 despite the turmoil caused by the recession and the fact that both generations have aged five years.

Americans across the three generations surveyed cite health care costs as one of the most significant risks to their retirement, yet the topic isn’t being regularly discussed by most families. Boomers (40%) are the most likely to say they regularly engage in conversations about this issue, followed by their parents (39%) and children (29%).

“It is absolutely essential that families engage in detailed discussions about money, including how their current financial situation aligns with their needs and goals,” says de Baca. “Failure to do so can have significant implications that may ripple across generations for years to come. These are seldom easy conversations, but they are among the most important ones parents can have to help ensure a financially secure future for themselves and their children.”

Additional study findings, tips for engaging in family money conversations and commentary from our financial experts, are available on the Ameriprise newsroom and at ameriprise.com/generations.

About the survey

The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.

About GfK

GfK is one of the world’s largest research companies, with more than 11,000 experts working to discover new insights into the way people live, think and shop, in over 100 markets, every day. GfK is constantly innovating and using the latest technologies and the smartest methodologies to give its clients the clearest understanding of the most important people in the world: their customers. In 2010, GfK’s sales amounted to EUR 1.29 billion. To find out more, visit gfk.com or follow GfK on Twitter: twitter.com/gfk_group.

About Ameriprise Financial

At Ameriprise Financial, we have been helping people feel confident about their financial future for over 115 years. With outstanding asset management, advisory and insurance capabilities and a nationwide network of 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.

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