The Middle age is usually considered to be a stage of life where you experience the “empty nest” as children leave home. For more people in their 50s, 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 to their own place, finding jobs that provide enough for them to support themselves.
Why do they return?
The “boomerang generation” is largely back home as a matter of necessity. In the current economic climate, most have little choice but to turn to relations or friends for somewhere to live on the cheap. The job market is bleak, with unemployment on the increase, low salaries for entry-level jobs and the increasing cost of accommodation, make it difficult for young people to be able rent, let alone have their own property soon after graduation.
It is also true that nowadays 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; coming home thus provides an extremely appealing and viable alternative that usually comes free or at least heavily subsidized, with room, meals, utilities and transportation provided.
The implications
This change in the pattern of life’s stages can lead to delayed independence. Indeed, parents may actually be holding their children back from success and a fulfilling life by overindulging them. Naturally, many young people would rather keep their options open and are not willing to compromise and accept just any first job. Unfortunately, they tend to ignore the need for saving and investing but are often more pre-occupied about the now and instant gratification.
Obviously, there are also significant financial implications for parents who themselves have retired or are near retirement. The limited funds they have accumulated to be able to enjoy a secure and comfortable retirement after several years of sacrifice for their children are now being spent on grown up children.
Plan Ahead
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 40s or 50s, 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. This phase in life has been coined “the sandwich generation”.
Do not jeopardise your retirement
It is tempting to put aside your own retirement needs for your aging parents and adult children. To be able to help your family you first need to have some level of financial security. Although you may feel somewhat cash strapped from paying off your mortgage, raising and educating children, and shouldering some of the costs to care for your parents, don’t jeopardise your retirement savings; try to continue to budget, save and keep any debt under control. If your parents have built assets of their own they may be able to absorb some of the costs of their care.
Set some parameters
If you have “boomerang” children, have a conversation to lay out terms or a broad understanding with clear parameters set. In some cultures, parents go as far as to draw up a formal contract to outline expectations and financial responsibilities. It is easy for children to slip back into the routine they had before they left home several years ago, but you should encourage them to contribute in some way towards the upkeep of the house; this might include contributing towards weekly groceries, petrol and utilities such as diesel, and cable TV if they are employed. If you can afford it, set this money aside in savings for them as a small nest egg which may be needed 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 whilst 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.
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