The boomerang effect is in full swing as many millennials continue to lean on the boomer generation for financial support, according to a recent TD survey.
At a time when the older generation should be preparing for retirement, many instead are experiencing a “déjà-boom” effect, as children or grandchildren return to the family home or need financial assistance.
Here are some tips for boomer parents who are working towards retirement and boomerang kids who want to be independent:
Be Ready for Whatever Life Throws Your Way
Despite this new reality, it is important to understand that your retirement goals are still within reach. Meeting with a financial planner and doing a goals-based assessment is key to determining what your options might be for supporting your kids while keeping your plans for retirement on track.
Work with a planner to identify your short, medium and long term goals, and make sure they align with your kids’ goals so everyone is working toward the same overall objective.
Negotiate the Return
Discuss how everyone can contribute to the household budget and operations. For example, you may be able to cover the basics like room and board, but other living expenses like cell phone bills, car payments, or financial support for recreational activities are additional costs that could be covered independently.
Also, consider having everyone pitch in on the costs of running the day-to-day operations and dividing the household chores.
Prepare to “Relaunch”
Whether it’s your newly married daughter and her spouse and child, or your son who recently graduated and has moved back home, there are plenty of opportunities to educate all family members on the importance of being fiscally responsible and working toward financial independence. Invite them to join in your financial conversations to discuss how to navigate their current circumstances and establish good financial habits.
When meeting with a planner, look for someone who has experience working in multi-generation family dynamics in order to receive advice that is specific to your particular situation.
Decide When to Release
As you and your offspring are mapping out financial action plans, identify a date when you will no longer be financially committed to each other. As you approach this date, set up a series of mini-goals that will allow you to free up funds to divert toward your retirement savings while ensuring that your kids are meeting the savings targets they set in their own financial plan.
The road to retirement can have a lot of unexpected curves. Following these tips and having open conversations can help navigate the journey to becoming retirement ready.
(❚ Written by TD Bank Canada. More detail information: 204-985-4620. 2030 Corydon Avenue WPG.)