Supporting Adult Children Can Be ‘Financial Shock’ in Retirement
Parents are increasingly supporting their children financially for longer periods of time, which can serve to be a major financial disruption for seniors as they enter retirement. According to 2016 data from the Pew Research Center, living at home with parents had grown in commonality to the point that it was more likely than living alone or with a roommate and/or partner.
That growth in commonality is actively being observed by Dirk Cotton, former engineer and founder of retirement finance blog The Retirement Cafe. While relating that his biggest surprise in retirement was centered on the ever-increasing cost of sufficient health care, Cotton related that his second biggest surprise was the need to continue supporting his adult children as they struggled to get on their feet.
“The second major financial shock is that nowadays your kids never actually leave home,” Cotton tells Business Insider in an interview. “We still had adult children to help.”
The millennial generation is actively having a harder time finding work that can fully support them after graduating college, and as a generation are generally in worse financial condition than their parents were at the same age.
According to 2019’s Modern Wealth Survey conducted by Charles Schwab, 62 percent of surveyed millennials describe living paycheck to paycheck. While millennials on the surface have benefited from a 67 percent rise in wages since 1970 according to a Student Loan Hero survey, that growth in wages has been outpaced by an increasing cost of living. Millennials are also affected by a drastic increase in the cost of higher education, and that financial instability increasingly affects their parents, as well.
These generational difficulties manifested in the experiences of his own children, Cotton says.
“They had the same troubles that a lot of people are having, getting their career started,” he tells Business Insider. “They’d come back from time to time when they were between things.”
Not only are retirees affected when their kids return home, but they often also incur the expenses of putting their children through college in the first place. On top of those expenses, retirees also have to deal with more perennial post-working issues such as pensions, personal finances and Social Security benefits.
Read the story on Business Insider.
Article by Chris Clow on reversemortgagedaily.com
