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

Doomed: Our adult children's concerns about our drag on their future

Our adult children are worried about us. Not necessarily about our health and well-being. It's more a generation vs generation thing and the fear that the aging population (that's us) might doom their economic future. That is, we'll drain the purses that support  Medicare and Social Security and leave them working without a future safety net and in a disrupted economy. Here's why: Those of us who are currently working pay into a fund that pays benefits to those who are retired. Since we're living longer than our parents and their parents did, we're using up those funds faster than they can be replaced. The math is not in Gen Z's favor.

To sum it up with brief factoids:

The share of Americans age 65 or older is expected to grow faster over the next 30 years than the share of Americans between the ages of 25 and 54, the so-called “prime working age.”

The labor force participation rate is expected to dip over the coming decades.

With more people in need of care and fewer people working, economists see a potentially crushing burden on the U.S. economy and welfare system.

All is not doom and gloom. There are economists out there who see an alternative reality. A 538 story  reports on three scenarios that tackle the labor part of the problem and one that takes a less gloomy look at the financial side.

Encore Careers: Jim Johnson, a professor at UNC's business school, sees us--America’s 70 million or so baby boomers --as an asset that could help build “the longevity economy,” which is what the economy will have to look like to accommodate an aging population. Here's how he puts it:

“Everything has to change in both the built environment and the social environment to accommodate an aging population. ... Given the labor market challenges that we're facing today, post-COVID, ‘encore careers’ [beginning a new vocation later in life] are something that we're going to have to pursue in a major way.”

Immigration Boost. Higher rates of immigration help countries experiencing population aging because immigrants tend to be younger and therefore more able to work than the domestic population. Many economic forecasters assume that by 2030, population growth from immigration will supersede that from natural increases (births minus deaths).

Recruiting Workers. Only two OECD countries spent less than the U.S. on programs to encourage labor market participation — like job training programs and employment subsidies — as a share of their GDP. Economists suggest that we (theU.S.) invest more in such programs to get more people working.

We Have Assets: We may not be the drain on the social security purse that everyone fears. As retirees, many of us have saved for our so-called Golden Years. What sets us apart from our European counterparts is the share of income we older residents draw from assets, rather than government transfers, in our old age. That means we may not be the burden Gen Z fears we will be.

painting: Heidi Malott

Bank on It: Why aren't our adult kids moving out and on?

I remember it well: The thrill of graduating from college, getting my first "career" job and, highlight of highlights, moving out of my parent's house in the suburbs and into a one-bedroom apartment in The City with my best friend as a roommate.

A generation later, our kids graduated from college and did things a little differently. They had the thrill of independence by moving around the country, taking non-career jobs and living in group homes with an assortment of roommates.  They eventually figured out what they wanted to do with their lives. But they never lived in our house again.

Another generation later, reports tell us, the kids aren't into the kick of independence.  A good number of them aren't moving into their own apartments or taking a share of a room in a group house in a city in another part of the country: They're living at home with their parents--even if they have "career" jobs that pay well. They're doing this while they calculate how much in savings it will take for them to achieve their personal and financial goals. Those goals may not include living independently right now.

It's a trend that's been noticed by the NYTimes. Here's the newspaper's observation/explanation for the phenomenon:

Young adults are often encouraged to leave the nest as a rite of passage to establish financial independence and build a life and career away from their parents. But for some members of Generation Z and younger millennials, factors like the high cost of living, student debt, family obligations or cultural traditions keep them living at home for longer than expected. The pandemic and its resulting economic downturn also forced many young adults to move back in with their parents.

A Pew Research Center survey this past summer gives the rising trend a numerical perspective. 

In July 2022, half of adults ages 18 to 29 were living with one or both of their parents. This was down from a recent peak of 52% in June 2020 but still significantly higher than the share who were living with their parents in 2010 (44% on average that year) or 2000 (38% on average).

Many of us are waiting for our adult kids to move on and out, but generation Z  seems to see the world as more perilous and less financially sound than we did. And they're not going anywhere for now. The thrill is gone.

painting: Edward Hopper

 

 

Money Matters: Should a financial gift come with strings attached?

We are a generation that wants to--especially if we have the wherewithal to--help our kids out financially. Whether it's a gift to assist with the downpayment on their first house or money to pay health insurance premiums, we're often very generous with our grown children.

Whatever the reasons behind the gift, there is always a question of whether they do with it what we intended. That is, if we hand over a chunk of cash to pay down their car loan, will we be angry if they use the cash to buy new clothes.

In a recent Social Qs column, Philip Galanes answered a reader who told Galanes she often sends her brother and sister-in-law, who were living in financially tight circumstances, a check "to make their lives easier." Her aim, she explained, was to make sure they had money for emergencies; that her largesse would, in effect, be put aside as a safety net. But when her brother called to thank her for a recent gift, he mentioned that he and his wife had used it to travel to Europe. Her question--and one that applies directly to those of us who are financially generous to our grown children--was, how could she make sure, without dictating how they use the money, that they use it responsibly--at least responsibly in her eyes.

Galanes's answer is a practical one for those of us who struggle with the same or a similar issue:

There is nothing wrong with calling your brother to say: “Please tell me to butt out if you like, but I worry about your financial security. If you ever have an emergency and can’t pay an essential bill, please let me know, and I will try to pitch in.” From a distance, this seems to be what you want to do: help protect them without becoming their bank or fairy godmother.

But to continue giving them money and then feeling resentful when they spend it differently from how you imagined, isn’t fair to any of you — particularly given your hazy sense of their financial condition and prudence.

In other words, we can tell our kids there's a string attached to a particular gift--paying off of a car loan, say--and hope they use it that way or we could pay off the loan directly. No point building up resentments over gifts: they're supposed to be joyful and helpful not a sourse of future ill will.

Blessed are those of us who are able to give the gift and trust our children to use it as they see best.

painting: Picasso

 

Money Matters: Raising cash to help your kids fix up their house

If I were to survey my friends and their friends, I'm pretty sure I would find that almost all of us who could afford it helped our grown kids buy their first home. As a generational trend, it's kind of what we did and do. For some of us, the help is a loan and we expect to be repaid. For others, whatever chunk of the downpayment we give them is a gift, no strings attached beyond an expectation of a few invites to dinner.

But what happens when we retire and feel less flush--especially today as the financial markets are eating away at our savings. Our kids may already own a house but may need substantial help to update or add on to it--for a growing family or even for a suite for us.

Should we tap our IRA to help them out? Or just say no? For one set of parents whose daughter needed a loan to renovate her house, the answer was yes, and with good reason. Once the renovation was complete, they planned to sell their house and move into their daughter's home. They couldn't sell their house to raise money since their daughter and her family were living with them while the renovation is underway.

So, how to finance the help for a daughter who's very much part of their future living arrangement?  The parents wrote to a Washington Post real estate columnist to ask whether they should tap their IRA for the $300,000 to lend their daughter or if there is a better way to borrow to finance the renovation, which is slated to take about a year. The parents plan to use the proceeds from the eventual sale of their home to boost their retirement account or pay off any loan they may incur.

Using IRA funds may be the simplest way to tap into money--interest-free cash! no closing costs! no bank fees! But it would be the worst of all possible options. Withdrawing such a large amount from an IRA would trigger a huge tax bill.

The columnist suggested other options. Here are the nuts and bolts of two options: A cash-out refinance of the parent's house would raise money but it would incur interest rates (ever-rising) and upfront fees. A home equity line of credit wouldn't raise quite as much money as a refinance could but would probably mean higher interest rates on the loan--though lower fees/closing costs. The interest rates might not be that much of a factor--if the renovation is finished on time and the parents can sell their house quickly to repay the loan.

Which is a long way of saying, our helping hand is a riskier business than ever.

(BTW: If you want to know more details on how the relative costs of the refinance versus home equity line of credit might work out, check this link to the Post story.)

art: Rauschenberg, Third Time

 

 

Money Matters: When our heirs get ahead of themselves (and us).

We have an elderly cousin. He never married and lives alone in a Park Avenue apartment where the walls are lined with old paintings that may or may not be worth a small fortune. His closest relatives (besides us and some second cousins) are two nephews. One of them has struggled financially, and our cousin helped his nephew when he was in crisis a decade ago. Now the nephew has called his uncle and asked for help again, only this time he framed his request as "an advance on my inheritance."

Our cousin was shocked, hurt and angry--at the presumption of inheritance and because this was his nephew's first contact with him in more than a year. 

Maybe because this happened within our family, we--the editorial we that is-- weren't surprised to read a similar case of entitlement in a Social Qs. This time, it was a grown-up grandson. The grandmother had invited the family, including the grandson and his wife, on an all-expenses-paid cruise to Alaska. The grandson couldn't make it--he and his wife are expecting a baby soon. But the grandson didn't just send his regrets. He asked his grandmother for a cash gift equal to what she would have spent on him to join the family trip. He suggested she donate the money to the baby's college fund.

"I  am stunned," the grandmother writes to Philip Galanes. "I was happy to help them with wedding expenses and part of the down payment on their first home. But I told him this is not how life works. Was I wrong?"

Before I share Galanes' wise answer to the stunned grandma, I'll let off a little steam. What is it with this sense of entitlement to a parent, grandparent or uncle's "fortune" before they have closed out their lives? If a close family member has a financial emergency, why not make the case for a loan, preferably with a payback schedule? Okay. Steam vented.

Galanes was not sympathetic to the grandson's request."You know it's bad when I'm shocked," he wrote.

"I see two ways of reading your grandson’s nervy request: He may be an entitled young man who has grown too comfortable counting your money as his. Or — and this requires some compassion — freaked out by the pending responsibilities of parenthood, he might have made a silly cash grab.

In either event, you were right to refuse him. Your generous offer to spring for a family vacation does not oblige you to make compensatory payments to those who are unable to attend. I would have a follow-up conversation with your grandson to clear the air.

...Tell him he is not entitled to your money and your invitations do not include an option to collect their cash value instead.

But that's not all Galanes had to say:

Let him know, too, that his behavior was hurtful, and risked making you feel like a walking ATM.

Which is exactly how our cousin felt. And why he's taken his ATM out of service.

painting: Marius van Reymerswaelle

Money Matters: Can we control the gifts rich relatives give our kids?

We're a protective species. When it comes to our kids, we want fair play in all things, even when it's only a matter of gifts from family members. Or maybe I should say, especially when it's gifts from family members and even more especially when those relatives happen to be rich. We may not want them to give our kids hefty high school or college graduation checks for fear of our kids feeling "entitled." Or we may appreciate their being generous but we want them to be even-handed--making as big a fuss over one child as the next. (I posted on this issue here.)

Beyond fairness, we may have high expectations that a wealthy uncle or sister will shower our child with a lavish wedding gift when that child marries, a gift that might help set them up in life.

That was the issue raised in Social Qs. The complaint a mother of the bride sent to Philip Galanes was straightforward:

My daughter got married last month...My sister and her husband came with their two children. They are extremely wealthy — like, flying-on-private-jets-to-expensive-vacation-homes wealthy! (We are not.) I assumed they would give my daughter a generous cash gift to be used as an eventual down payment on a home. Instead, they gave her five place settings from her gift registry that cost $500. I am hurt and angry about their lack of generosity. My mother thinks I should talk to my sister about this so it doesn’t affect our relationship. Your thoughts?

It will come as no surprise to anyone who follows Social Qs that Galanes sees the situation through a different prism. He reminds the mother of the bride that she is not entitled to "commandeer other people's money."

Galanes then adds a sound observation and solid piece of advice:

"Where I come from, $500 is not a chintzy wedding gift. And you didn’t say anything about your daughter’s relationship with her aunt and uncle. So I disagree with your mother for now: Don’t talk to your sister about her gift until you have made peace with the fact that it was hers to give."

photo credit: Maia Lemov

The Grandchild IOU: Can we sue if our kids don't reproduce?

Here's the premise: After we've helped support our adult children through college and early work years, they (and their spouse)  owe us grandkids. If they don't deliver, they should pay us back. Moreover, we can sue them if they don't fulfill their part of the next-generation equation. 

Hah! A laughable notion, right? But in India, a mom and dad are suing their son and daughter-in-law for failing to come up with a grandchild after six years of marriage--and years of financial support that included paying for a lavish Bollywood-style wedding.

The suit may sound out of whack to our Western ears but, as reported in the New York Times, in India the suit  made headlines in national newspapers and "prompted a debate about how much control parents should have over their children’s life choices." The demand is, according to the couple's lawyer, "an Indian parent thing." (The parents are suing for $650,00 in damages.)

Cultural differences aside, it's hard to accept that a sense of let-down can be righted by a financial transaction. That said, the grievance is all too relatable. It's culturally acceptable here to encourage our recently married children to "get on with having a family," even to make what we think are "cute" little remarks along the lines of "what are you waiting for?" If they decide to go forth childless, we may choose to make our displeasure and disappointment known at our peril.  

Here's a little more from the Times story on what pushed the parents over the edge.

After spending their savings to have their son trained as a pilot in the United States, Sanjeev Ranjan Prasad and Sadhana Prasad financed his lavish wedding back in India, along with a luxury car and an overseas honeymoon.

They assumed their investments would eventually pay off, in the form of a grandchild. But as time ticked by, they say, the not-so-newlyweds showed little interest in producing one.

After waiting anxiously for six years, they decided to sue.

While the suit is given little chance of succeeding, that doesn't mean it hasn't hit a sympathetic chord with many parents of adult children.

Raavi Birbal, a lawyer in India, said that the suit would probably not go far because its arguments violate rights enshrined in India’s Constitution, including the right to liberty.

“This is actually a very rare case,” Ms. Birbal said. “That is why it is so much in the limelight. But, ultimately, it is the couple’s choice to have a child, not that of their parents.”

Hari Bhushan Yadav, 52, a shopkeeper in Haridwar, said that residents had been discussing the case with great interest over tea outside his shop, and that older people tended to sympathize with the plaintiffs.

painting: Claude Monet, The Cradle

 

 

Our Children's Love Lives: What to do when we object to their choice for a mate.

We're not always happy with our child's choice of their future spouse or significant other. Our reservations about them may not be centered on the old standby, "No one is good enough."  We may have valid concerns about the future mate's values, behavior or distressing cultural differences. Unless there are signs of physical or emotional abuse, we're usually stuck with swallowing hard and trusting our child knows what they're doing.

Sometimes other family members chime in--not necessarily to support our point of view but to let us know we should stand back and not be too judgmental. And that makes us feel, well, as a reader wrote to Ask Amy, blackmailed.

The reader/mother's objections: Her daughter's fiance is a heavy pot user (so is the daughter), a felon for selling narcotics, an unemployed college dropout who has psychiatric and physical health problems. In the mother's telling, the daughter is beautiful and has lived a privileged, upper-middle-class life. The parents are paying their daughter's living expenses and tuition as she attends graduate school. The other children--the daughter's siblings--have told the mom to support their sister's choice of a partner; moreover, if she doesn't she (the mom) could lose contact with all of them. The dad is retiring soon and feels they should support the relationship but let the daughter know she's on her own financially.

 "If I cut off my daughter financially, she’ll hate me," the mom writes. "If I don't support her relationship with her boyfriend, they'll all hate me."

Amy's advice finds a middle way by leaning on a distinction between “support” and “accept.” That is, the mom should accept her daughter's choice in a partner "because she is an adult and she has the right to make terrible choices."

What does accept mean? Amy expands on that notion:

Invite them over for dinner, include them in family events, and yes — you may be forced to face and tolerate your disappointment in your pot-using daughter and her choice in partner, but until she is forced to face her own choices and disappointments, she will never be inspired to perhaps choose differently.

The support part is also a compromise. If the parents don't want to continue to pay rent and other living expenses for their daughter and her fiance, they could limit financial support to the cost of the daughter's education. Here's Amy with an additional twist:

If she continues with her graduate program and you can afford it, you might choose to pay only her school bills (directly to the school).

We love our children. We want the best for them and count ourselves fortunate when we can afford to help them achieve their goals. But sometimes, we have to pull back. The trick is to do so without permanently damaging our relationship and by making sure our children always feel the love of family. We also need to cover ourselves in case we failed to see the positive side of their choice.

painting: Harlequin by Picasso

Leaving a Legacy: Is there a fair way to divide our assets?

The two most boring words in a parent's vocabulary: Estate Planning. Within that world, the most volatile words are Unequal Shares.  Whether we have a gargantuan billion-dollar estate to divvy up among our children or just a small savings account to apportion (or somewhere between those two extremes), we may have reasons to deviate from the mean.

The mean, of course, is to divide whatever we have equally among our children. That way we are likely to head off squabbles--and possible litigation--among our heirs. It's true that we're no longer around to witness any ugliness that may ensue but as financial advisors are fond of saying, "Most of us would like to be remembered for who we were, not for what we had." (Backing that up, a 2020 Merrill Lynch study found that two-thirds of us want our family to remember us as the people we were; only 5 percent ticked the box for wanting to be remembered for our accumulated wealth.)

Would a positive memory be besmirched by our kids fighting over what we've left them? Let's go to the research again. An Ameriprise survey found that, after we were no longer around to adjudicate, 70 percent of the fights between and among siblings involved how an inheritance was divided.

“With unequal inheritances, you run the risk of causing sibling animosity,” one estate planner said. “If you go this route you need to manage expectations so you don’t have one sibling blaming another.”

Why go the unequal route? A friend of mine with a disabled daughter has set up a special trust for her care and asked her sons to manage that trust. Most of my friend's assets will go into that trust. Her sons understand why and what their family responsibilities are.

There are families where one child is super successful financially and the other works in a worthy but low-paying field. In some families, one child has remained close to her parents while the other is estranged or one child manages to visit often but the other doesn't, or one has several children and the other doesn't.

As parents we may have all kinds of valid reasons for carving our estate into unequal shares. And a number of us are doing so. In fact, the percentage of parents who left unequal inheritances to their children more than doubled between 1995 and 2010, rising from 16 percent in 1995 to 35 percent in 2010. 

The key to avoiding sibling spats over unequal shares is pre-planning. As I've noted in my posts here  and here , while you're still in good health or of sound mind, it pays to sit down with your child (especially the one with the diminished share) and explain what you're doing and why. Facts alone may not be enough. Their emotional understanding of the unequal share may be helped by our reassurance that their share of our worldly goods is no reflection of how much we love them.  Estate plan aside, it never hurts to remind our children of our unmeasurable love for them. They're never too old for that.

art: Robert Rauschenberg

Money Matters: Grown children and the financial intelligence gap

A letter to a financial expert asking for advice about an inheritance was not your usual request. The question came from a woman whose father-in-law left her 29-year-old daughter---his granddaughter--a sizeable fortune in a trust that was currently being managed by her daughter's father. When the daughter reaches 30, however, she is eligible to manage the trust herself. Few of us are in the situation of being the parent of a child who is inheriting a fortune.  And yet, though the sums of money may be significantly substantial, the issue this parent faces is one many of us worry about: Will our grown children be able to handle financial responsibilities if we're no longer around to help them. How do we prepare them?

If you're interested, you can read here the expert's advice on helping the daughter understand her financial challenges and choose an adviser to manage the money.

But the expert's advice on preparing a child to be engaged in and understand how to handle financial responsibilities applies more universally. Here are some points Quentin Fottrell, who writes as the Moneyist, makes:

Encourage them to ask questions:

Unless your daughter builds enough financial confidence to ask questions and learn about how she can invest her money, and trust her instincts and establish her own risk tolerance when it comes to investments, she is vulnerable to another person stepping in and filling your husband’s shoes, particularly when he is no longer around to help.

Let them make decisions:

Trusting your daughter to make the right decisions is part of her growing up....The best you can do is to lead by example, and — I’m with you — part of that is allowing her to make her own decisions, as you and your husband have done with your own lives.

Talk things over with them:

Bottom line: You want your daughter to become an active decision maker, even if the answer is to do nothing for now; learn the basics of investing so she knows what questions to ask; and not hand her fortune over to one person to make decisions without her knowledge or understanding. It’s her money, after all.

The first step is for you both to sit down with your daughter and include her in these conversations. You will discover that you will all learn from one another.

painting: Marinus Van Reymerswaelle, 1539