Peter Boys, Boys Financial Services

Are Your Adult Children Draining Your Retirement Savings?


A number of recent surveys show that ever more adult children are returning home to live with their parents. This pattern has emerged in the past during times associated with economic downturns and this time is no different. As our economy struggles, it becomes much more difficult for young people to gain their independence.

This has led to a new classification – that of emerging adults, who bridge the gap between adolescence and adulthood. This based on the theory that people in their 20s go through a time of development that’s distinct from other stages of adulthood, and this helps explain the reluctance of some adult children to leave the nest for good.

A recent CIBC survey suggests that supporting adult children financially is draining their parents’ retirement nest eggs. The survey found that two-thirds of Canadian parents polled say they’re feeling the financial impact of doing this. Almost half of them said that supporting their adult children was restricting their ability to save for their retirement, while 20 per cent said it would significantly delay them starting into retirement.

  • Parents may have the will to help their adult kids but they may not always have the means as one in four parents said they spend more than $500 a month to cover their adult kids’ bills. The top expenses are groceries and other household living costs as well as cell-phone bills. The survey found that 42% of adults aged 20 to 29 were living at their parents, either because they never left or because they returned home after living elsewhere.
  • Researchers found the reasons young adults move back to live with their parents are linked to a number of factors, which includes attending post-secondary school, postponing marriage, becoming unemployed, unable to find work, unable to find affordable housing, etc. Young adults living at home are often associated with going to school and unlike in the United States, a lot of young Canadian adults don’t go very far away, going to school close to their homes.
  • But how do adult children living at home affect family structures? It varies, but the best relationships are ones in which both the parents and children behave like mature adults as both the parents and children have to adapt.
  • Parents in a sense have to learn not to parent so much, which is difficult when you’re financially contributing to the well-being of this adult child in your midst. And their children have to learn to stop reverting back to being a 9 or a 13-year-old, which is becomes very easy when they have parents who want to parent, so there is always the need for give and take.

There’s a real need for open communication when adult children move back in, so that the children understand that there’s no free lunch and that they are expected to help cover their food and housing costs. Parents also need to understand that their financial wellbeing has to come first, or face the risk of running out of money in retirement.

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