Millennials care more about their parents' retirement than their own inheritance

Whether or not it's deserved, millennials have a reputation for being entitled. But when it comes to their parents' finances, the younger cohort may be a lot less selfish than people think.

According to a new study by Edward Jones, the St. Louis-based mega-brokerage, most Gen Y Americans, as millennials are also known, care deeply about whether their parents can afford a comfortable retirement. In fact, they emphasize this priority over their own inheritance.

The study, which Edward Jones conducted with the research firms Age Wave and The Harris Poll, surveyed over 12,000 adults across the U.S. and Canada. Of the millennial respondents, defined as those now aged 27 to 42, a solid majority — 68% — said they were worried their parents hadn't saved enough money for a healthy retirement. And an even larger majority — 83% — said securing that retirement was more important to them than inheriting their parents' wealth.

"It was one of the more surprising findings of our study," said Lena Haas, the head of wealth management advice at Edward Jones. "They said, 'You know what? We would rather know that our parents or our parents-in-law are financially secure … than know that they can pass on the money to us.'"

As a generation, millennials are poised to inherit a historic amount of wealth. As baby boomers pass away over the next few decades, experts are anticipating a "Great Wealth Transfer" to their children of as much as $84 trillion by 2045, the research firm Cerulli Associates has estimated.

But according to Edward Jones' study, that's not millennials' top priority. In fact, they were more worried about their parents' retirement than other generations — while 68% of millennials worried their parents hadn't built enough savings, just 57% of Generation Z and 55% of Generation X had the same concern.

Some wealth managers said these findings matched their experience.

"I have several millennial clients who are so concerned for their parents' retirement that they have set up investment accounts for their parents' benefit," said Liz Windisch, the founder of Aspen Wealth Management in Denver, Colorado. "This isn't a situation where they are concerned about inheritance, but about the parents meeting their basic needs in retirement."

For some millennials, however, there may also be an element of self-interest at work. Sixty-one percent of Gen Y respondents said they worried their parents "may become financially dependent on me" in their old age — a possible consequence of not saving enough. This, too, was pronounced among millennials — only 42% of Gen Z and 43% of Gen X had the same worry. 

Millennials do care
So how can boomer parents secure the retirement their millennial children want for them? Their kids offered many suggestions: 37% of millennials said they wanted their parents to live a more frugal lifestyle, 28% wanted them to reduce their debts and 26% wanted them to work longer or return to work.

Haas said she found these tips amusingly familiar.

"What I thought was kind of ironic was the type of advice that millennials gave to their parents," Haas said. "It's exactly the type of advice that parents give to their children."

In addition to finances, millennials also offered their parents some pointers on their health. Thirty-five percent recommended more physical exercise. Another 35% suggested that their parents "regularly challenge themselves mentally." Thirty-two percent wanted their parents to spend more quality time with family, and 31% hoped they would develop new creative interests and hobbies.

Whether or not these parents embrace their children's advice remains to be seen. But what's clear is that millennials have a strong interest in their elders' quality of life during retirement — stronger, even, than what they receive in their will. This is reflected not only in Edward Jones' study, but in the experience of many financial advisors.

Read more: Millennials are seeking financial advice earlier: Ameriprise study

"With my millennial clients, our conversations about their parents are almost exclusively about concerns that their parents are not ready for retirement expenses," said Eric Scruggs, the founder of Hark Financial Planning in Stoneham, Massachusetts. "Very few of my clients want to plan on inheriting anything from their parents; they would rather have their parents spend the money while they are alive rather than provide a larger inheritance."

Steve Branton, a senior vice president at Wealthspire Advisors in San Francisco, works with multiple generations of clients from the same families. For him, the idea that millennials would prioritize their mothers' and fathers' finances over their own was not a surprise.

"That aligns with my experience working with both adults and their parents," Branton said. "Clients worry not only if they will be OK, but whether their parents will be OK."