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Hello World – My First Blog: Protecting Your Retirement

Well, I have finally entered the world of the blog. This will be my first entry in my blog. Keep watching for more thoughts and ideas about everything from developing your game plan on dealing with the IRS to making a succession plan to pass the baton to the younger generation. For now lets discuss what you need to do to protect your retirement when an adult child moves back home.

In the present economic climate, many parents not only have their adult children return home but they also have their grandchildren live with them as well. There are some very important things to discuss before they come home to keep this from becoming a permanent arrangement that could devastate your plans for retirement.

It has become rather difficult for many people in their early to mid 20’s that are just graduating from college to find employment that not only provides benefits, but pays well enough for the graduate to take care of themselves and all of their bills. The job market is extremely competitive making it next to impossible for new college graduates with little work experience to get a well paying position.

Many children are returning home after graduation to live with their parents while they gain some work experience and work their way up to a position in which they will be able to earn a desirable income and take care of themselves.

While most parents are ready and willing to help their children when they are in need, it is important to lay some ground rules before they officially let their child move back into their home.

Lay Ground Rules

Make sure that your child understands that while you are willing to help them it is not going to be a free ride and that they are expected to contribute to the household as long as they are living with you. If they are not financially able to do this at first, they could be responsible for making sure certain things are done around the house such as cleaning, grocery shopping, yard work or something of that nature.

It is important to encourage your child to take a job so that they are at least bringing in some income until they are able to find something better. This way they can contribute at least minimally to the financial drain that they are making on their parents.

Make sure your child is aware that this is just a temporary situation until they are able to stand on their own. If your child is aware that you are willing to help them when you can, but that you expect them to be on their own shortly, they will be more likely to work as hard as they can to get their affairs in order. Don’t overlook the need for them to be considerate of others in the household by agreeing to a lifestyle and schedule appropriate for a young professional instead of the lifestyle they enjoyed in college.

Let you Child know about your Budget

Some children believe that their parents should sacrifice for them. The problem is that you have done the sacrificing you need to do for your children, and now it is time for them to learn to take care of themselves.

You will want to create a budget for yourself. This budget needs to include not just your regular monthly bills, but the money that you need to put into savings and retirement as well. Now the most difficult part, once you make this budget you need to stick to it. Parents often want to protect their children, but there are many options available to these children when they are trying to pay their bills, and there is no reason that a parent should put themselves into a situation where they need to pull money from their retirement in order to help their child.

Teach your child financial responsibility through loans.

There are many reasons that you child may be in this financial situation and some of them may be that they do not know how to properly handle their finances. You will not always be around, so your child needs to learn how to stand on their own two feet. Do not just give your child money, loan it to them. While the repayment terms do not have to be immediate, make sure that your child is aware that you are expecting them to repay this money. It is also not a bad idea to tack on a low interest rate just like a regular loan would have.

Once you have created your game plan stick with it

A child often has a way of knowing how to manipulate at least one of their parents. Make sure that once you have laid down the rules that you both stick to them. Tell your child that you are willing to help them for a certain period of time, they will be expected to contribute in certain ways, and that they will have to make decisions that will have them prepared to move out on their own. This may mean that your child might have to take a job waiting tables and also take on a roommate or two when they move out in order to work within their own budget. Sometimes that is just part of life and there is no shame in doing what you need to do in order to take care of yourself.

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