Published Date: 08/11/2014
By Reneé Watkins
Baby Boomers are defined as individuals born between the years of 1946 and 1964. This demographic of Americans has been tracked statistically throughout their lifetime and for good reason. By 1964, Baby Boomers numbered more than 75 million and equated to 40 percent of the American population.
This generation of Americans was brought up in a time of independence and free thinking. The 1960’s were a time for civil rights and women’s equality. Lifestyles were more active. More women worked outside the home and traditional roles were redefined by non-traditional action. Marriages, which typically took place in a couple’s early twenties, were now happening in the late twenties. As a result, couples began having children later as well.
As the Baby Boomer generation now ranges from 50 to 70 years old, thoughts of retirement from the workforce are coming into view. However, many of these Americans are finding themselves financially caring for their children and their parents at the same time. This responsibility has put a strain on any savings they may have been able to put aside and all but eliminated any opportunity for early retirement from the workforce.
Research shows 57 million Americans currently live in a home where multiple generations of a family are still present. Fidelity Investments reports the average person has retirement savings of only $81,000 and that 50 percent of Americans in a recent survey do not expect to retire by the age of 65. Of those, 24 percent do not expect to retire by age 70.
As younger people continue to struggle with finding work and as aging parents are living longer, retirement savings plans are depleting at a rapid rate as couples find themselves supporting themselves, their parents and their children at the same time.
Here are a few tips that might help in dealing with these issues. Even if you are not a Baby Boomer, this same trend is likely to affect you at some point later in life. Now is the time to start thinking about how you would handle the situation, both financially and emotionally.
- Understand your resources and your limitations. Analyze the costs associated with taking on the added responsibility of caring for children who may return home and parents who may need your support later in life. Can you afford it? You may have to cut back on your own spending in order to do so. Or, you may not be able to afford it at all and have to refuse your children and find other alternatives for parental care. It is natural to want to help these people who have been so very important in your life. There will have to be sacrifices for all parties involved if you intend to pull this off.
- Establish rules up front. If your child returns home, how will they contribute? Will they pay you rent? Will they assume responsibility for the many household chores that now occupy your time while you are taking on the financial responsibility for them? They will want to be treated as adults while living under your roof and as adults they will need to be responsible for contributing to the success of the household. If you have both children and parents living with you, the children should contribute to the care of the parents and ease some of that pressure as well.
- Openly discuss the finances. Now, more than ever, there needs to be a budget. If the size of your household suddenly triples and your income does not, there needs to be some adjustments made. A clear understanding on how much is available and how much is being spent is absolutely necessary. You cannot expect everyone to be responsible if they do not understand the facts of the situation.
- Update your own plan. Meet with a financial advisor to discuss your new situation. There is no way to guess how long you will be responsible for a multi-generation household but your own plan may need to be adjusted in the interim. The last thing you want is to find yourself someday back to just the two of you and realize you have nothing left for your own retirement.