This is a subject that I can relate to and confirm in my own life. I have parents in their 80's who do not suffer financially or health wise, thank God. But I do have the adult children side of the problem. With three in college, thankfully almost done, it has been a strain on our finances. As the study confirms the casualty of this financial help is my own retirement plans.
My income has suffered, along with many others, because of our country's economic problems. This left us scrimping and budgeting like never before. We find it difficult to save for retirement at a reasonable rate. It will definitely effect us when we are in retirement.
The study also reveals, in 2007, when the original Money Across Generations study was conducted, 44% of boomers claimed they were trying to grow their savings. Now only one in four (24%) say they’re putting away money for the future and just as many (24%) report simply trying to maintain what they have.
Many boomers have to assist their parents financially. More than half (58%) report assisting their aging parents in some way, including helping them purchase groceries (22%) or pay medical (15%) and utility bills (14%).
No one can ever say Boomers are not generous people. The Money Across Generations study says most boomers surveyed (93%) say they have provided some kind of support to their adult children. A majority have helped them pay for college tuition or loans (71%) or helped them buy a car (53%). Many are also helping their kids pay for car and health insurance, as well as cover basic expenses like rent, utility and car payments.
Impact on their retirement goals
Only 10% of boomers admit that helping their parents has slowed down their retirement savings, while one-third (34%) feel the same about the support they’ve provided their adult children.
If the Boomers aren't digging into their retirement accounts, then where are they getting this cash to help their families? Most say they are just using their income and normal cash flow. Unfortunately, they are short changing their own retirement savings plans which will only come back to bite them when they are well into their retirement.
But the problem for many boomers is that they may not have a choice in helping their families. Health care costs for their aging parents are on the rise and what child would turn down a parents request for help.
During this time of year when many college students are graduating they are finding a shortage of jobs. This is forcing many of our children to come home. With no means of support, mom and dad have to step up with financial support and even help paying back college loan debt.
Boomers are generous and do not mind helping
Despite uncertainty around meeting their own financial goals, a majority of boomers (86%) say that if they had to do it again, they would still support their adult children financially. Meanwhile, 20% express guilt about not being able to provide financial assistance to their adult children who currently need it.
What's a parent to do? Is it our job to offer unconditional financial support which can devastate our own goals and plans? It's hard to say no to a family members request for help. Part of any discussion of financial need is first the boomer should talk openly about how any financial help would effect the boomer's plans and goals. By putting all the cards on the table the party in need of help may learn their request will cause negative repercussions down the line for the other party. Openness is the key to any for any financial discussion.
Link to original discussion at Ameriprise.comBaby Boomers Dole Out Cash to Family Members Despite Uncertainty About Their Own Financial Future