Boomerang kids, sandwich generation - just when you thought it was safe to think retirement thoughts about spending and enjoying your money, you face having to support family members financially.
"Ted left home after getting his degree - but he couldn't find a job in his field and within three months he was back home," one of my colleagues told me. "Now he's decided to return to school to get a degree in another field. And guess who's paying for his tuition."
Adult children frequently return home, sometimes with children from a failed marriage. .. or never leave home in the first place, often because, like Ted, they can't find enough work to support themselves.
A CIBC poll found more than one-third of parents with under-25 children will have to delay retirement because they have had to use savings to pay for their children's education. Another third has taken on more debt to pay school bills.
Then there are elderly parents, often having lost their spouse, who can no longer manage on their own. If a retirement home isn't an option, for financial or emotional reasons, the elderly parent(s) will move in with an adult child - and once again the resulting expenses will delay retirement plans.
That's the problem.
The solution lies in regular communication and review.
Especially when you continue to support adult children, consider a "letter of understanding" outlining negotiated responsibilities, conditions, limits and so on. With elderly parents, any siblings should be willing to share the expenses.
You don't want to lay a guilt trip on anybody, but consider making it clear, in a non-critical way, that the financial support you are providing means you must delay or curtail retirement plans, especially if you have to take on additional debt.
Review these arrangements at least annually, certainly after six months in the first year. Situations and prospects can change, often dramatically. You might have to make changes in your letter of understanding.
Putting everything in writing demands extra time and effort, and for some people might be an uncomfortable process. But for personal as well as financial reasons, being businesslike invariably pays off.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally. Email [email protected]
