| Baby Boomers who once made up the “me generation” are morphing into the “we generation,” as their focus shifts from themselves to others. Nowhere is this more evident than in their dealing with family issues. Many are helping elderly parents and grown children with their financial needs. Unfortunately, this additional monetary commitment is forcing many middle-aged working Americans to postpone or save less for their own retirement.
According to a study sponsored by mutual fund company Putnam Investments, 21 percent of the 29.3 million working adults with at least one living parent provide them with an average of $240 of financial support per month. The picture is similar for the 23.5 million working Americans with grown children. Almost half provide their kids with some financial support, including nearly one-quarter that either house or write a rent check for them.
“Americans who were already struggling to prepare for their own retirements are now facing new, unexpected responsibility for their parents and grown children, thanks to rising costs of housing and living expenses,” said William Connolly, head of retail management at Putnam Investments.
Nevertheless, they give willingly. Fifty-seven percent of those supporting their parents financially said they were “very pleased” to make the sacrifice. Thirty-eight percent of parents supporting a grown child felt the same way, though this support came as a surprise to 70 percent of them.
What’s the best way to deal with the financial squeeze caused by supporting both young and old adult family members? According to Connolly, better planning - particularly with the help of a professional — can reduce the risk of sacrificing your own financial security for the sake of loved ones.
“Working with a professional financial advisor can help you create a retirement plan that considers your entire family picture,” said Connolly. “With adequate preparation, you won’t have to choose between love and money.”
Top 5 forms of support provided to parents — Base: parents alive (45+, never retired, working 15+ hours per week)
- Help with household maintenance chores: 24 percent
- Provide transportation to doctors’ appointments, worship or social events: 17 percent
- Review and make suggestions about their investments: 17 percent
- Fill out health insurance paperwork: 16 percent
- Help select doctors, hospitals or other caregivers: 16 percent
Top 6 forms of support provided to adult children — Base: have adult children (45+, never retired, work 15+ hours per week)
- Advise them about jobs and careers: 52 percent
- Advise them about relationships: 51 percent
- Help them out with living expenses other than leisure travel, medical or housing expenses: 29 percent
- Review and make suggestions about their investments: 27 percent
- Provide a place to live in our home: 20 percent
- Pay tuition for college, graduate or professional: 20 percent
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