Parenting Grown Children: What Dr. Spock Forgot to Tell Us

Money Matters: Staying on the job to help the kids out

One friend is paying for her daughter's attempt to start a family through a surrogate pregnancy. The tab is high--$100,000 when all is said and done. Her husband is semi-retired and her daughter and son-in-law could never afford the tab. So she's continuing to work--"to pay the bill." At least, that what she says--that if she weren't paying for the surrogate's pregnancy and all the testing and medical procedures that were part of the pregnancy, she would retire--or work part time.

Another friend is also not retiring. Her son has a prestigious job--but the salary is not nearly as high as the job's profile. Maybe someday he can cash in on all that prestige. Meanwhile, the parents want to be sure there's the wherewithal to help out--when the son's roof needs repair, the basement floods, the grandkids' dental bills mount--without eating up their retirement savings. So they, too, are continuing to work--despite tempting thoughts of retiring to travel around the world.

Lots of us are doing the same thing--putting off retirement in order to have the cash to make life easier, better, more bearable for our children. Some of us are kidding ourselves that this is why we continue to work. A lot of us like working--like our jobs and the second family that work provides--or fear the loss of vitality that might come with retiring from the work force. We don't want to give it up, even if we are dog-tired weary by the end of the work week. While some of us continue to work "for our children," many times it's more of a mixed reason. What makes me nervous is any hint to the adult children that they are the reason we're still working. What a guilt trip that would lay down. And it might not even be true.

Lending Money: What to do when your adult child needs financial help

 These are hard times. The Great Recession is taking its toll--not only on our 401ks but, for some of us, on our jobs and worse, our children's jobs and financial well-being. Just to put things in perspective, a recent survey by Fidelity Investments found that 41 percent of U.S. households did not have emergency funds sufficient to cover three to six months of living expenses. What to do if your child runs into trouble and needs some money to tide him or her over? Here are some pointers from financial and other experts:

First point: Can you afford to make a loan? Here's the measure Ira Bryck, director of the University of Massachusetts Family Business Center, uses: "It's the same rule as gambling: Don't loan what you can't afford to lose."

Point two: What's the loan for? 'lf your finances are at the edge, what they'll use it for can make a difference. If the loan is to launch a new business or buy a house, maybe it can be delayed; if it's to keep the foreclosure wolf from the door, maybe you'll want to stretch your own finances. The answer to point two can temper the answer to point one.

Point three: Sibling rivalry runs deep and can crop up when you least expect it. Will you be accused of playing favorites? Will the sibling in need by charged by brothers or sisters of draining their inheritance. It's your money to do with as you please but it might be a good idea to keep any assistance just between you and the kid in need--unless everyone's getting tapped for aid.

Point four: Do the math. Let's say your investments are earning 7 percent a year( don't' we wish!). If you're asked to loan $20,000 for five years, the real cost to you for sidelining that amount of money is $28,000. This is not to say you shouldn't lend the money--it may be a good investment if it lets your child finish school or buy a house, but it should be factored into the "what's the money for" calculus. Point five: Your needs count. If the loan tips you into financial instability, you may have to say no. There may be other ways to help.

Money Matters: How we view the recession's impact depends on how old we are

As readers of this blog may know, I've got quite a collection here of studies done in Great Britain, Australia and other countries on how "the bank of mum and dad"  is faring in this economic downturn. Short answer: not well. To complement those reports, here's one from Pew on how our perspectives of the downturn and our financial well being are tempered or magnified by the age group we find ourselves in. Our grown kids, it turns out, are the most hopeful--time is on their side. But here's some of what Pew [Pew Research Center's Social & Demographic Trends] found about the rest of us.

Adults 65 and older--most of whom have already retired and downsized their lifestyles--have escaped the downturn's full fury. Adults in late middle age (50 to 64) have seen their nest eggs shrink the most and their anxieties about retirement swell the most. Younger adults (ages 18-49) have taken the worst lumps in the job market but remain relatively upbeat about their financial future.

Some details of interest:

Older adults are less likely to say the recession has been a source of stress in their family. Despite the recession, three-quarters say they expect to be able to leave an inheritance for their children--even though more than half of all older adults say the recession has reduced the amount of money or property they expect to bequeath.

Two-thirds of adults ages 50-64 say they lost money in the past year in mutual funds, individual stocks or 401(k)-type retirement accounts. Of those who report such losses, two-in-ten say they lost more than 40% of their investments' value and nearly four-in-ten say they lost 20% to 40%. By comparison, far fewer older adults or younger adults report losing money in stocks and retirement accounts in the past year.

Money Matters: An Aussie take on what we can afford to give our adult kids

The economic retrenchment is, as we know, global. We aren't the only families having to pull back financially, and that includes support for our grown children--be it paying off a college debt or helping with the down payment on a house. A report out of Australia mirrors what many here are experiencing.
Evidently, the hard times down under are silencing the peal of wedding bells. Here are some highlights from a report by the St George Bank:

Generation Y expects parents to help pay for weddings, house deposits and education fees, but concerns over retirement and debt have taken priority for most mums and dads.

70 per cent of baby boomers believe the global financial crisis has seen their assets shrink in value, and 71 per cent are now concerned about their financial health. As a result, only 6 per cent of parents rate providing financial assistance to their adult offspring as a top priority.

Almost half of those parents with adult children said they were focused on saving, either for retirement (25 per cent) or other future expenses (24 per cent).

Another 41 per cent favored paying off debt, either their credit card (24 per cent) or mortgage (17 per cent), the survey showed.

Bottom line: “Circumstances have changed for many and it’s understandable that parents are now having to focus on their own needs and financial health,"a general manager of the bank said. “As a result, when it comes to paying for things like weddings, first home deposits, overseas travel and childcare, many Gen Ys must now stand on their own two feet.”

Money Matters: How to talk about money

They've got tips--100 of them--for discussing money, an always touchy topic when it comes to talking to your adult kids without making them feel like you are muddling in their financial life. They are Kathryn and Captain Frugal who write a Money Saving Blog.

Here are some of the tips aimed at the adult children themselves (and that we, as their parents, should bear in mind):

39. Set clear boundaries. Decide on your own what you will and won’t discuss with your parents and financially and stick to those boundaries.

40. Respect your spouse and children. As you get older, your family priorities shift away from your role as a child and towards your role as a parent and spouse. When discussing finances with your own parents, respect the rights to financial privacy that your other family members have.

41. Rely on parents for financial help only as a last resort. After you’re on your own, you need to be responsible for your own finances. If you rely on parents for help, then they are going to feel that they have a right to tell you how to spend and save and you want to avoid that.

42. Don’t overreact. You don’t live in your parents’ house anymore so you don’t need to get all worked up about their opinions on your money. Just listen and let it go.

43. Find non-money things to discuss with your parents. Parents sometimes try to get us to talk about money because it gets us riled up. In a weird way, this makes them feel that they’re still closely involved in our lives. If we are close in other ways, this will be less of an issue

44. Use the “I” word. Parents still feel responsibility for your finances since you’re their child. They’ll feel less responsible if you talk about your own feelings and situation without blaming them.

45. Stop talking about the past. The financial past is over with so deal with it and move on.

 

Here are some tips for you, as the parent of grown and independent kids:

72. Do more listening and less talking. Your kids needed you for advice and financial guidance when they were young. Now they need to sort things out on their own with your sound financial ear as support.

73. Let your adult kids know that you’re willing to help them learn how to budget, save money and get into investing. Then wait until they say they are ready for your help. When they ask, be there to assist.

74. Invite them to attend financial classes and workshops with you.

75. Solicit your kids’ advice on technology as it applies to money. They probably know more than you in this area!

76. Admit your changing financial fears. As your kids become adults, they are ready to hear the reality of your fears about money as you get older. Admit this and find a proactive way to eliminate those fears together.

77. Consider their finances when planning family things. You may want your kids home for Christmas but if this puts a financial burden on them then it creates a lot of stress. Discuss the issue openly to resolve the financial aspect of these things.

78. Put your financial affairs in order. This will help when dealing with money as you get into your older years.

Money Matters: Hard Hit and Hating It

Many of us who have grown children have been hit hard financially by the economic crisis. Money we thought we'd have to live comfortably on and still help out our adult children is gone. Is that changing our relationship with our adult children? Some of us may be worried about becoming dependent on them, or that they'll be dependent on us and we won't have the wherewithal to help.Or we jsut feel so bad about what's happening that we take it out on the grown kids, as one financial adviser noted recently.

Friends who used their second homes as vacation retreats for their children are having to sell those homes. May not sound like the worst crisis in the world, but it means the loss of a family gathering place and a familiar setting--one that may date back to their children's childhood--for their grandchildren to spend idle weeks of summer.

Friends who had planned to help their children buy a home are finding they don't have the cash to help out with the down payment. Or to pay off college loads. Again, it may not sound like a terrible crisis, but the loss of power--of still being the Big Daddy or Momma--are palpable. So many of us want to make life easier for our children, and this fiscal crisis is playing havoc with that plan. Maybe this is healthy--maybe some of us coddled our children. But a lot of us didn't. We just took great enjoyment from using the money we'd earned and saved over a lifetime to make our children's lives easier. And for many of us, that ability is gone.

How are you coping with fiscal losses? Is it affecting your relationship with your grown children? Or your own feelings about yourself vis a vis those children?

Money Matters: Having less for the Little Ones (who are now big)

I don't mean to be repetitious. It's just that the reality is all around us and everyone is feeling it: $3 trillion has seeped out and disappeared fromour 401ks and other savings or retirement accounts. For many of us, that loss wipes out money we had hoped would cover a downpayment for our kids' first house, their college or graduate school tuition, or tide-over money while they made their way through grad school or their first (low-paying) job. And, of course, our kids are scrambling to stay on their feet, knowing the safety net they had assumed was there is, well, not.

Not a good feeling. Here's a little statistical meat to back that up: 

Stat one: Nearly a decade ago, the Center on Wealth and Philanthropy estimated that the U.S. was on the verge of the largest inter-generational wealth transfer in history—$41 trillion, with about half if that dough being passed on while the benefactors were still alive.

Stat two: A recent Boston College study estimates that as many as 30 percent of older households are less secure in retirement as a result of the decline in housing values.

The disappearance of a sizable chunk of our generation’s money and security has left many of us resetting priorities--particularly when it comes to spending. Vacations are the first thing that seems to get downgraded. One friend reports: We've canceled the three-week trip to India; we're renting a beach house and inviting the grown kids to join us. We hope they'll suggest chipping in. We'll take them up on it if they do. 

What sort of trade-offs or steps are you taking to adjust to recent losses and keep what's left of your nest egg in tact? Have you changed your retirement plans? Travel plans? Spending patterns? Has it affected your ability to help your kids?

Not happy thoughts. But sharing ideas can help.

Money Matters: Helping the kids till it hurts

For many of us, gone are the days when we could open our wallets with ease and help our grown children when they were in need--paying off a college loan, helping with the down payment on a house or even defraying everyday living expenses. Now our 401ks are half of what they were, the value of our homes has shrunk. Our personal sense of wealth is melting away. And yet the kids still have needs--needs we want to fill. Not just to ease their way but because right now it may be tougher for them at the beginning of their careers than it is for us at the tail end of ours.

It appears to be the same rough go for the Brits. A recent study by Scottish Widows (must find the origins of that name!) found that adult children were sapping their parents and grandparents of large amounts of money, forcing them to cut back on daily spending and to take on more debt.

The research showed that one in six of those parents who have given money to their children have increased their own levels of debt, while one in ten have had to put a stop to any kind of savings of their own in order to fund their children. Moreover, nearly a quarter of adult children or grandchildren are using or have used parental handouts to fund their day-to-day living expenses or spending money. Over a third needed the money to pay off debt, and 30 per cent needed the cash for a house purchase.

Here's one other point from the research: Of the 6,000 adults surveyed, almost half of those that have already given money to their children expect to dig deeper and give them more in future.

Re-Nesting: Moving home--to help us out

Here's a twist on refilling the empty nest. In these tough economic times, families are piling in together to cut costs, but it isn't always kids moving back to have mom and dad help them out. The kids may move back in to help out with the parent's rent. Here's the recent story:

"Last year, Kanessa Tixe’s dad had just finished building a three-family house when he lost his superintendent job in February. He wasn’t sure how to make the $5,000-a-month mortgage on the new house in Queens, N.Y.

So Tixe and her siblings decided to help out in an unusual way: They moved in. In December, her father moved into the first floor; her stepsister and husband moved into the second floor; and her stepbrother and Tixe took the third floor. The entire family has become roommates, banding together to pay rent and help their dad with the mortgage until he finds long-term tenants."

Sign of the times?

Here are the stats to watch: According to the U.S. Census Bureau, In 1915, the average number of people sharing a home, including parents, offspring, and “extended squatters,” was 4.5. By 2006, that number had shrunk by nearly half to 2.6. By 2010--who can say what that number will be. And how many of us will be inviting our kids home to help out with the overhead.

De-Nested: When adult kids move back home, politeness is strained.

I'm a sucker for a new phrase, especially when it captures the definition of the moment. Here's my most recent find: Economy of gratitude. It refers to the breakdown in the way we treat each other--we being the parents and ourr adult children who have moved back into the family nest. It's when family members notice only the inconveniences and ignore the nice things that we do for one another.

According to a recent story in the Los Angeles Times, that doesn't have to happen. "Children and parents can peacefully coexist by approaching the new living arrangement as they would if they were taking on any roommate: Agree in advance on how to handle household purchases, cleaning and other responsibilities. Resolve the question of who is in charge and how the house is to be governed, and the situation may not seem so bad after all."

The L.A. Times is covering the issue because California is one of the epicenters of the foreclosure crisis. One of the phenomenons of that tragedy is that people who are losing their homes or in danger of losing their homes, are bunking in together intergenerationally. That is, parents with children or children with parents. But that phenomenon is not limited to the usual--parents and their 20-something children. It involves older children. And here's why

An AARP study--released in September and reflecting 2007 foreclosure woes--found that more than a quarter of the foreclosures and delinquencies in the second half of 2007 involved homeowners ages 50 or older. SInce then there has been the calamity of the plunging stock market and the unraveling of the financial safety net for many midcareer Americans and their parents. No reliable figures yet exist on the number of adults forced to move in with parents because of the financial crises--or adult children moving in with their parents to help the parents--but it's clear this group consists of older, previously well-established homeowners.

The time are a changin' and it's not for the better.