Middle age is usually considered to be a life stage where you experience an empty nest as children leave home. For many people in their fifties, this has not been the reality; a growing number of returnees dubbed the ‘boomerang generation’ are postponing the traditional expectations of leaving home and returning to their childhood bedrooms.
Parental empty nests are filling up with one or more young adults whose expensive education, so far, has not equipped them to assume the expected next step; that is moving into their own home and finding jobs that provide enough for them to support themselves.
The boomerang generation is largely returning home as a matter of necessity. In the current economic climate, most have little choice but to turn to family or friends for somewhere to live cheaply. The job market is bleak, with unemployment on the rise, low salaries for entry-level jobs and the cost of accommodation increasing every month. These factors make it difficult for young people to be able to rent, let alone buy their own property after they graduate.
It is also true that, these days, parents have become more indulgent. Many have provided a nice lifestyle for their children, who are now used to a certain quality of life, a pampered existence which they cannot maintain without claiming it at home. Returning to their parent’s home thus provides an appealing and viable alternative that usually comes free or at least heavily subsidized, with a room, meals, utilities and transportation provided.
Naturally many young people would rather keep their options open and are not willing to compromise and accept the first job that lands on their laps.
There are however significant financial implications for parents who themselves have retired or are approaching retirement. The limited funds they have accumulated to be able to enjoy a comfortable retirement after several years of sacrifice for their children are now being spent on grown-up children.
There is the very real possibility that one or more of your children may return home for a while, so as you make projections as to the level of income you may require to sustain your retirement, keep this in mind; this will inevitably raise your monthly costs or could even delay your retirement plans. In your forties or fifties, it is likely that you simultaneously have to bear the costs of caring for aging parents, continue to support your children and fund your own retirement.
It is tempting to put aside your own retirement needs for your adult children. To be able to help your family, you first need to have some level of financial security. Although you may feel cash-strapped after paying off your mortgage, raising and educating children, and perhaps shouldering some of the costs of care for your parents, be careful not to jeopardize your retirement savings; try to continue to budget, save and keep any debt under control so that you can retain your independence in your retirement years.
If you have boomerang children, have a conversation to lay out terms or a broad understanding with clear parameters set. Encourage them to contribute in some way towards the upkeep of the house; this might include contributing towards weekly groceries and cable TV if they are employed. If you can afford it, set this money aside for them as a small nest egg for when they eventually leave home. If they are not earning, they should contribute in non-monetary ways.
Encourage your children to have a clear financial plan to help them develop sound financial habits that will last them a lifetime. They should try to make specific progress towards budgeting, controlling their debt and saving. Even while they are still under your wing, they can learn some strong lessons about the real world as they navigate the transition from young adulthood to financial independence.