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Adult Children Returning to the Nest
by Marina Goodman, CFP®
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One of the casualties of The Great Recession has been parents' much-anticipated empty nest. "Susie can't get a job after graduation and she's coming back home until she gets on her feet." It's a refrain that is all too familiar across the U.S. "Reoccupy Elm Street" is in full swing, and it's up to you and your spouse to shore up your defenses. On the line? Your own financial security and long-awaited plans for retirement.
Establish Firm Ground Rules
On one hand, you want to help your child. On the other, you need to keep an eye on your own wallet. You also want to empower your child and not contribute to his helplessness. If your child is over 18 and comes back home once he's done with his education, try to dispassionately assess his situation and your own, which can be difficult. However, if you want to reclaim your empty nest, it's critical to lay down some important guidelines sooner rather than later:
- Explain to him in no uncertain terms that the rules have changed. He may be your child, but he is no longer a kid and you expect him to behave like the young adult he is. Whenever he was younger, it was fine for you to support all his financial needs. However, this is no longer the case. He now needs to pull his own weight in terms of contributing to the household, both financially and logistically, to whatever degree he can.
- Encourage your child to get a college degree if she doesn't have one, or appropriate vocational training. For all the dismal employment headlines, one fact remains crystal clear: people with college degrees have an unemployment rate of 4.0%, versus 8.7% for those without a degree (Bureau of Labor Statistics News Release,"The Employment Situation-December 2011," January 6, 2011). If your child is entering college, take an active role in helping her select a course of study and degree choice. Make sure it is something marketable. Nursing - yes. History of basket weaving - no.
- Make it clear that your child is expected to work - either at a job, finding a job, or educating herself to get a job. Even if your child can't get her dream job now, she should look for some kind of job to pay for her own expenses, including gas, entertainment, etc. If your child is employed, but wants to live at home because she has student loans, help her make a savings plan, as well as a payment plan, for the debt. Giving the gift of a financial plan will save you money in the long run.
- Outline what your child will do to fulfill his responsibilities and what you will do, and hold him to it. Make sure you have a timeline for how long you expect him to be with you. Perhaps part of the plan can stipulate that for a certain amount of time, perhaps six months or so, you will help him financially, but after that, any money spent on his behalf can be considered a loan. It may sound harsh, but this might motivate Junior to think with more clarity and speed about what he needs to do to grow his wings and fly the coop. In addition, if it's structured properly, it could benefit both of you on your taxes. Consult your tax provider for more details.
- Remind your child that she is expected to be a productive and helpful member of the household. She should wash her own dishes and clean up after herself, do her own laundry, help with other chores whenever possible, and abide by any other rules set by you and your spouse.
It's Time to Think about Your Future!
It may not be easy enforcing all the rules, but it's necessary. Naturally, you want to help your child, but remember not to lose sight of your own needs, especially in this stressed economy.
You and your spouse have put your children ahead of yourselves for years; it's not a good idea to do this any longer. It could put a strain on your current budget, or worse, postpone the retirement that you and your spouse have been looking forward to for so long.
Marina Goodman, CFP and investment strategist with Brinton Eaton. Based in Madison, NJ, Brinton Eaton is a national wealth advisory firm with a long history of serving individuals and their families across multiple generations. The firm helps its clients protect, grow, administer, and ultimately transfer their legacy of wealth through a full range of integrated services, including lifetime cash flow projections, financial/tax/estate/retirement planning, investment management, charitable giving, and business succession planning. Brinton Eaton's clients tend to be corporate executives, professionals, entrepreneurs, retirees, and multi-generational families.
Take the Next Step:
- Find out: Could paying for kids' college hurt your retirement?
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