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Encore
A blog about living in and planning for retirement

Are Your Kids Putting Your Retirement At Risk? Part II

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Would you support your adult children at the expense of your own retirement security? For a majority of baby boomers—57%, according to a new survey by TD Ameritrade, Inc.—the answer is yes.

Thanks to the recession, the question is not a theoretical one for many families. According to the survey, 54% of boomers have had a child, age 25 or older, move back home for three months or longer. Parents, it appears, are trying to help their adult children weather high unemployment rates and the consequences of having loaded up on debt.

But for the parents, the financial consequences can be problematic. Of those “sharing the nest with their adult offspring,” 42% reported a “negative impact on their finances,” according to TD Ameritrade. Moreover, among the 55% of boomers who now plan to delay retirement, 17% blame a decision to support adult children or other relatives.

Interestingly, the survey points to generational differences when it comes to parental support: “Thirty-nine percent of Gen X and 41% of Gen Y has received financial support from a parent after college, compared to only 22% of matures”—born between 1930 and 1945—and 34% of boomers, the survey says. (Members of Gen X were born between 1965 and 1976, while Gen Y spans from 1977 to 1989. The boomers were born between 1946 and 1964.)

Likewise, only 9% of the “matures” said they had ever had to move in with relatives as adults. In contrast, 20% of Gen X and 23% of Gen Y have done so. Moreover, the survey adds, 25% of Gen Y reports that parents are defraying such ongoing expenses as those associated with cell phones, insurance, and automobiles.

Due to the rising cost of a college education, “Gen Y is graduating with larger amounts of debt on their balance sheets,” says Lule Demmissie, managing director of investment products and retirement at TD Ameritrade. The tight job market, of course, has aggravated their financial problems.

TD Ameritrade’s advice to parents: Consult experts to ensure you aren’t compromising your retirement security and “develop a timeline to help everyone regain his or her financial independence.”

Judging by the comments on a similar blog post by SmartMoney reporter Catey Hill, readers are disturbed by the trend:

  • “Adult children should be ashamed to be financially supported by their parents. You have to cut the cord sometime.”
  • “Having practiced law for over 30 years, I cannot tell you how many times I have witnessed parents financially ruining themselves due to their ‘adult children’; it is epidemic! The list of how ‘adult children’ can bankrupt their parents is endless…. Their reward for being such a ‘caring parent?’ Generally, nothing more than getting kicked in the teeth….Its the enabling parents that need the help; not their worthless ‘adult children’!”
  • “If you raise your children correctly, teach them to work hard, work smart, study math & science, and how to be self-reliant, then why on earth would you be giving them money after they finish school? If 59% of parents are giving their adult post-college children support money, then that would be 59% of the parents who didn’t teach their children well.”
  • It’s not the rich here, it’s the middle class and upper middle class that have raised children to expect to have a car, big house/apt, nice meals right from age 22 onward. So they pay for everything their child does, buys, eats, goes. And then what? They get old and forgetful and think this coddled adult can take care them? when s/he has been co-dependent on them for decades!?”

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    • The article should have read “Are Your Parents Putting Your Retirement At Risk? Talk about blaming the victim! The majority of these “adult children” bear the brunt of job outsourcing, skyrocketing college tuition, dwindling social safety nets, income stagnation, housing bubble- induced sky high rent increases, etc, etc, etc! Baby boomers had it easier, and better; the only reason they have wealth, savings, bubble-induced home values (and more age-related job security) is that they came of age during an era when society invested in youth. College was free. Homes were affordable. The economy was better managed, and less volatile. National debt was low, because their parents paid high taxes to fund Boomer futures. Once established as adults, Boomers voted their own selfish interests for two decades, and shirked taxes, thus eroding the social infrastructure. Unfortunately, after being born on third base, Boomers think they hit a triple….and blame their kids for the mess they made. If only Boomers would stop congratulating themselves, they might see they are the most entitled, ME-centered generation in history!

    • The article should have read “Are Your Parents Putting Your Retirement At Risk? Talk about blaming the victim! The majority of these “adult children” bear the brunt of job outsourcing, skyrocketing college tuition, dwindling social safety nets, income stagnation, housing bubble- induced sky high rent increases, etc, etc, etc! Baby boomers had it easier, and better; the only reason they have wealth, savings, bubble-induced home values (and more age-related job security) is that they came of age during an era when society invested in youth. College was free. Homes were affordable. The economy was better managed, and less volatile. National debt was low, because their parents paid high taxes to fund Boomer futures. Once established as adults, Boomers voted their own selfish interests for two decades, and shirked taxes, thus eroding the social infrastructure. Unfortunately, after being born on third base, Boomers think they hit a triple….and blame their kids for the mess they made. If only Boomers would stop congratulating themselves, they might see they are the most entitled, ME-centered generation in history!

    • Entitlement is all about expectations and boundaries. An entitled child has unrealistically high expectations and has not been exposed to appropriate boundaries. With this internal map, he will struggle with relationships, his career, and have limited success. You can help undo the damage by not indulging his expectations and setting limits on what you are willing to do for him. Let him know that you think he’s very intelligent and capable and that he will figure out how to pay off his debt. Then be brave enough to stand back and let him do just that!

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

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