As baby boomers approach retirement while their children look for financial help, many are feeling the financial strain.
A new TD survey found 62 per cent of boomers can’t save enough for retirement because they’re supporting adult children or grandchildren. Those kids, however, aren’t taking that money obliviously: 44 per cent of millennials who rely on their parents’ or grandparents’ support said they know that help means fewer retirement savings, and 43 per cent said they’d cut costs rather than asking for financial help.
“As a parent or grandparent it’s natural to want to help our kids and grandkids who may be facing financial challenges such as finding full-time employment or paying their day-to-day expenses,” Rowena Chan, senior vice-president at TD Wealth Financial Planning, said in a news release. “It’s important that this desire to help is balanced with the goals you have when it comes to retirement.”
She also notes boomer pre-retirees shouldn’t stress too much if helping their children has affected their savings strategy. “A lot can be accomplished in the 10 to 15 years before retirement and planning ahead is a key step in making the journey as smooth as possible.”
For one, pre-retirees should discuss what children who have returned home can contribute to the household budget. For example, they may be happy to cover room and board, but expect the kids to pay for their own cell phone bills, car insurance and movie tickets, as well as contributing to household chores. It’s also important, Chan says, to come up with an exit date, when pre-retirees will no longer financially support their children.
Use with permission from Benefits Canada