6/5/2012 1:05 PM ET|
Boomers giving away too much?
As they feel more pressure to support their children and aging parents, their own financial stress grows.
In a poignant scene in HBO's "Girls," the parents of a young 20-something living in New York inform her that they will no longer be giving her money every month. She will need to get a job and learn how to support herself. Hannah, the 20-something, protests. She later returns to her parents' hotel room to beg them to reconsider. Her mother refuses. She's worked hard, she tells her daughter, and as a college professor close to retirement, she deserves a comfortable retirement, along with the lake house she's always wanted.
As young adults struggle to find their footing in this economy, often turning to their parents for help, many baby boomer parents find themselves trapped between their own financial security and that of their children. A new survey from Ameriprise Financial found that more than half of boomers have allowed their grown children to move back home with them rent-free, despite the fact that their own financial stability has deteriorated over the past five years.
The survey reveals that many baby boomer parents are feeling simultaneous pressure to help their aging parents and struggling children, and to shore up their own savings and investments as retirement approaches. Many of them are also unable to work as long as they planned, which further hurts them financially, says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. "Boomers are feeling significantly less confident that they can maintain their lifestyle and retire on time," she says.
These six emerging trends explain why baby boomers feel so financially squeezed:
1. Baby boomers feel financial pressure from all sides. In addition to their own investments being knocked down during the recession, many boomers were forced to retire earlier than planned due to job loss or health issues, which hurt their earnings. At the same time, they want to help their adult children, many of whom are struggling in today's job market, as well as their own parents.
"We're seeing boomers under a great deal of pressure to help other family members," de Baca says. In the survey, four in 10 boomers said it was important for them to help their children or grandchildren pay for college. Just over two in 10 said it was important for them to help provide financial security for their parents.
2. Boomers feel more pressure to support their adult children than they did five years ago. "Parents have always helped their kids with college and education, but now it seems to be increasing pretty significantly," de Baca says. "It's not just college, but prolonged support." More than half of boomers said they worry their children won't have enough financial resources to fund a financially secure retirement.
3. Boomers don't realize that the help they give to family members is hurting their own financial situation. Just 10% of boomers say the help they provide their parents is slowing down their own retirement savings, and one in 3 said the same about the support they give their grown children. But de Baca says the impact is probably far more widespread than that -- people often just don't realize it. "They're not necessarily taking money out of a qualified retirement account, but that's just one element of the complete retirement picture," she says. In fact, even inviting a child to live at home can have a negative effect on savings, she adds.
Five years ago, 44% of boomers said they were working on increasing their savings, while today, just one in 4 say they are doing so. Prioritizing their own retirement savings over other demands isn't easy; more than half of boomers say they would help a parent afford long-term care insurance before putting more money into their own retirement accounts.
4. Boomers are less ready for retirement than they were five years ago. Only one in three boomers reports being very confident in personal financial security. In 2007, 39% of boomers said they were very optimistic about their own financial futures. This year, just 17% of respondents said the same.
5. Families avoid awkward money conversations, which can compound financial strain. While boomers and their adult children alike say they are talking about money issues more than they were five years ago, many are still shying away from what they fear could be uncomfortable discussions. Half of boomers said they were taught growing up that money is something one doesn't talk about. "They also feel like it's none of their business -- 'I haven't talked to my aging parents, they're very private, I shouldn't bother them' . . . but the truth is, money is a family affair, and if you don't address it now, you'll have to address it later," de Baca says.
6. Parents think it's their own fault that their children don't know how to manage money. De Baca says that even though many parents think they missed their opportunity to impart money lessons when their children were younger, it's not too late to start. She urges parents to talk to their adult children about budgeting, planning and even retirement planning. For parents of younger children, she says, it's never too early to begin those conversations. More than half of adult children in the survey said they wished money had been discussed more openly when they were growing up.
The guilt baby boomer parents feel over not having imparted financial lessons earlier might motivate them to give their children more money -- which could further prevent those children from learning how to live on a budget.
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I did pay for college for both my daughters. One is doing ok now and the other can not find full time employment and went back to school. I pay for her apartment. I know many would think it a burden, however we think it is our obligation to provide a baseline standard for her if we can.
We drove old cars when they went to college and now it looks like we will have to wait a few more years prior to buying new ones.
I was OUT of my parents' house by 18. WORKED my way through college, walked to classes, lived on Ramen and Cream of Wheat. Didn't ever expect anyone to support me. I lived in the Ghetto and "bad side of town" a long time. I still don't expect anyone to GIVE me anything. I worked hard and finally made it. I retired at 55 with a good pension. I achieved well because I was willing to work hard and long. And I always, ALWAYS started at the bottom and worked my way up.
It is called a "work ethic." Look it up.
it wasn't all that long ago that the grand parents ,ma and pa and the kids all lived in the same house..
there was no nursing home or day care..
one house and that make it a HOME..
and a funny thing, there was less devorces, les unrulely kids,, and people enjoyed what they had, unlike today people having shuff just to have it..
truly sad thing is my mom got kicked to the curb as well..she's 70 and living on a fixed income of about 15K/yr..and now that I'm out of the job I've been doing for 8..with NOTHING to show for it I'm not in the best position to help her
..but yet..you pick yourself and dust yourself off..I've invested every scrap of money I can save into starting my OWN company and after 2 HARD years it's starting to pay off
..HOPEFULLY in time to provide for my MOTHER before she dies..IF this can come together..it will be me taking care of her..and I wouldn't have it any other way
..as for my father I hope he dies alone and penniless
..bad people DO win in this world..never forget that
I am 27 and would be too ashamed to take money from my Mom I don't intend to pay back! She was on her own making a living at 14 and I have been on my own since 17. She has worked very hard for every thing she has now.
If you have to live with your parents, pay them rent or do a lot of house work. Only ask for money if you need it for groceries and can't get a job. Shame on any kid over the age of 18 and not in college or working leaching off their parents!
awww..poor baby boomers
..then you gets tools like my old man who inherits millions from his parents..and treats it as his personal lottery winning. He goes out and marries a high maintenance party girl 4 months after meeting her. He bought a million dollars worth of homes on the beach in Mexico..100k worht of boats a biz he knew nothing about for half a mill then guilted me (w/ threats of no inheritance if you don't help me) into taking it over...cuz he was too lazy to do it. For 8 years I busted my @$$ 60-80 hrs week learning and growing the biz only to have him sell it from under me and keep all the sale proceeds.
that was 2004-2009..today?..the money's all but gone and what still remains in houses, cars boats in all gonna go to his "bride" and hers kids..not my family
..yeah boomers..you got it rough
I know one woman in her 30s, who gives almost all of her paycheck to her parents (in their 50s) because they are bad at managing money.
According to economists WWII started the whole 'Golden Age' boom. "Returning G.I.s were getting married, starting families, pursuing higher education and buying their first homes. With veteran’s benefits, the twenty-somethings found new homes in planned communities on the outskirts of American cities. This group, whose formative years covered the Great Depression, were a generation hardened by poverty and deprived of the security of a home or job. Now thriving on the American Dream, life was simple, jobs were plentiful, and a record number of babies were born. Many Americans believed that lack of post-war government spending would send the United States back into depression. However, consumer demand fueled economic growth. The baby boom triggered a housing boom, consumption boom and a boom in the labor force. Between 1940 and 1960, the nation’s GDP jumped more than $300 million. The middle class grew and the majority of America’s labor force held white-collar jobs. This increase led to urbanization and increased the demand for ownership in cars and other 1950s and 1960s inventions."
If all the complainers and blamers lived then they would have done no better. They would have thought that they were finally being rewarded with the life they fought for. They would have celebrated that life by living it no differently. This story is told over and over throughout man's history. Mankind does not have a clue when it comes to overseeing the welfare of the many. It's never been successfully done.
Ha, my boomer parents have not ever supported me financially or otherwise. I distinctly recall my parents telling me that they loved me, but they would not assist me in the finance area. As of age 18, I was expected to obtain employment. I put myself through college taking classes one or two at time as I could afford it, bought and paid off a brand new car (to establish credit), and bought a house by the age of 24. Fortunately, I still have my home eight years later despite 9 months of unemployment. This is due to buying at the low end of my range (mortgage is like a low rent in my area) and saving money rather than spending it on junk. I take pride in not having to ask my parents for help and hope to do better in life to be able to help them when they age.
However, I am aware that other cultures such as that of my in laws take it as expected that children will remain in their parents' homes while attending college and later while building their career. This can provide their children with a competitive advantage such as acceptance of a low paying internship. Whereas, I have bills that prohibit that ability. Further, I have had to work 2-3 jobs at a time to accomplish what I have. I like the multigenerational aspect. Typically, I have seen families that live together are better able to help each other. An example, the neighbor watches her grandchildren while her adult children go to work. This provides 'free' daycare. While there are family issues at times, it certainly is better than the situation of my single friend. She has 4 kids and works full time. She has to pay for daycare and is not able to accept overtime at work. This is a disadvantage for her versus the neighbor's adult children.
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