The Baby Boomer Boomeranger: Adult Children Returning Home

Jeopardizing Your Retirement By Financially Helping Adult Children

As parents, we want to give our children more than what we were given growing up. Whether it’s the latest technology, the newest clothing trends, or the most memorable vacations. That’s human nature, and there’s nothing wrong with that. But at what point is it time to cut the financial umbilical cord?

The Boomeranger
One-third of baby boomers are still helping their adult kids in their 20’s and 30’s financially. Actually it appears many of these baby boomers gave birth to boomerangers…adult children returning home to live with their parents. Not only are these parents stuck covering the cost of a roof overhead, but at times also a cell phone, car payment, car insurance, and health insurance.

At what cost do these extra expenses have on the parents? More often than not, a hit to their retirement savings. Whether it’s less being put back, or funds being borrowed or disbursed, not as much is getting holed away.

The Effect On Your Retirement
You expect once your child reaches a certain age they’ll be able to support themselves, and you’ll be able to start setting money aside for retirement. When that doesn’t happen, whether by a child that hasn’t moved out or a boomeranger, you have less of a time frame for that savings to accrue. That typically means you have to work a few more years than you’d like, and you have to live a little more frugal now and into retirement.

However, while all of the planning in the world can show us one thing, life can throw us something completely different. For instance, what if you aren’t physically able to work those few extra years?

I have seen too many families become financially strapped by taking on the financial obligations of adult children. While some assistance is fine, it’s important to understand the consequences it will have on your future.

Expect To Be Paid Back

With some planning, parents may be able to help out without short changing themselves:

  1. Layout a clear plan of action- Whether creating a budget, attending marriage counseling, or whatever the case may be, be clear. Handing over the cash without a plan to fix the underlying problem is simply placing a band-aid on the situation.
  2. Set up a payment plan- If money is being handed over, it’s a loan, not a gift. Expect to be paid back.
  3. Establish a time frame- Before the suitcase crosses the threshold, discuss an expected time-frame. It doesn’t have to be set in stone, but it lets them know you expect an end date.

Want to see more ideas about saving money? Check out my other posts on Fix Our Budget, and follow me on Facebook.

Photo by photostock. Published on 24 June 2011
Stock photo - Image ID: 10046819 

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