Has your empty nest filled back up? You aren't alone. A recent Pew study showed that for the first time in 130 years, young adults ages 18 to 34 were more likely to live in their parents’ home than with a spouse or partner in their own household. Blame it on the still-sluggish economy, stagnant wage growth, and student debt. Or maybe your kids just miss you.
Your recent college grad may still looking for a job. Or perhaps the first job's salary is low and your kid wants to boost savings for a down payment for a home of their own. The parental urge for caretaking, support, and help is strong. Adult children are moving back home, and in many cases, parents continue to support them financially. The adult children may be working and earning. However, their incomes are modest, and most parents would rather help them than see them struggle.
"Parents are willing to give up a comfortable retirement for their children, whether by spending on education or support for adult children," says Ann Minnium, founder and principal of Concierge Financial Planning, LLC, in Scotch Plains, New Jersey.
Here's the problem. "Money can only be spent once, and when it’s spent on child support, it’s not saved for retirement," Minnium says.
"I have many clients who are allowing adult children to sabotage retirement plans," Minnium says. "I realized with great alarm that I am in fact one of those financially enabling clients, specifically with my oldest son who graduated from college last May and moved home to look for a job. I learned the hard way what helps."
Helping Kids to Help Themselves
Here are four ways to help prevent boomerang kids from delaying your own retirement.
Make an agreement before your child moves home. "Set a time table, for example, six months, after which time he has to move out. As Dr. Bradley Klontz and Anthony Canale pointed out in their Journal of Financial Planning article, 'Giving money to a chronically financial dependent individual is akin to giving a drink to an alcoholic to relieve him or her of the shakes,'" Minnium says.
Make sure time spent at home is productive. Too much time playing video games can lead to inertia and hopelessness, Minnium warns. "If your child is not employed or searching for a job, he can help with chores around the house and yard. I loved it when my son cooked dinner, and we continue to enjoy the beautiful stone wall he built in the backyard," Minnium says.
Employed adult children should contribute to household expenses. Require her to pay rent or at least cover the electricity, gas, and cable bills and add that to your monthly savings, Minnium says. "Allow her to pay as many of her expenses as she can. If she doesn’t have enough left over to eat out with her friends, it’s okay. This is part of the learning experience. She will be motivated to earn more so she can do more," Minnium says.
If all else fails, kick your kid out of the house. "My cousin kicked her son out of the house after he dropped out of college and slept all day and partied all night. It was the single hardest thing she ever did. She spent days, weeks, years crying about it, but it worked! Her son is now a successful attorney. Luckily for me, my son got a job and it never came to such a dramatic conclusion," Minnium says.
What the older generation doesn't seem to fully understand is that in the end they are still hurting children because it’s those children who will be supporting them when they run out of money in their old age, Minnium says. "Focus on your loved ones and the effects of your decisions on those loved ones."
Hands-On Retirement Planning
Retirement planning isn’t a set-it-and-forget-it proposition. Your plans take thoughtful care and the help of professionals.