When parents financially assist their adult children, it can cause them to delay or even abandon their own retirement plans, Ben Mattlin admits in Financial Advisor. But, when dealing with such a deeply personal and sensitive subject, advisors must exercise extra care not to seem cold and uncaring. It’s a big problem, though, since, as a survey by Thrivent found, 46% of parents surveyed had offspring between the ages of 18-35 move back in with them.
One-time requests for help shouldn’t surprise parents or derail their own retirement plans; reality is, even a child who has completed school and has a job may need assistance with buying a car or a first home, paying for graduate school or for a wedding, one adviser pointed out. While it’s extremely rare for anyone to be financially independent right after college, adult children need to understand economic realities.
Robin Patin of Chorea Advisors is quoted in the article, explaining the dual significance of age 25 when it comes to parents’ planning:
- “When planning, we usually plan for the children being part of family expenses until about age 25.” At Geyer Law, we definitely endorse Patin’s advice: “If possible, adult children should be brought into financial discussions.” (At our Indiana estate planning law firm, we try, wherever possible, to bring together family members of different generations to share values – and realities.)
https://www.rgeyerlaw.com/blog/2024/06/inter-generational-estate-planning-thought-partnerships/ - Many clients can’t retire until their youngest child turns 25. However, if working longer isn’t possible, more will need to be invested in retirement accounts to cover expenses — their own and their children’s.
Thrivent refers to dependent children over the age of 25 as “boomerang kids” faced with “growing economic challenges and evolving social norms”. The challenges include:
- rising housing costs
- growing student loan debt
- stagnant wages
- job market instability
The stigma once attached to moving back home has lessened, the authors note. Still, “boomerang parents” admit the experience has impacted their own ability to save for long-term goals.
From an estate planning standpoint, Steve Hartnett of the American Academy of Estate Planning Attorneys points out, if there are boomerang children in the picture, the documents should specify that the children must be allowed to continue to reside in the family home. At Geyer Law, we design trusts that can help adult children manage their inheritances while still protecting family wealth against heirs’ financial immaturity.
– by Ronnie of the Rebecca W. Geyer Blog Team
