Returning to the nest – what that means to your financial life
By Roger Higgins
Compared to previous generations, children are living with their parents much longer and many are returning to the nest for any number of reasons – most of them financial. Check out these re-nesting numbers*:
- 42% of young adults age 20 to 29 live with their parents – a significant increase from 30 years ago.
- 63% of young men and 55% of young women age 20 to 24 live with their parents.
- Almost one-quarter of young adults who live in the parental home have left at some point in the past.
The good news side of those stats is that when your children live at home longer, you’re less likely to experience sadness about an empty nest – when it eventually happens. The not-so-good-news is that supporting your children well into adulthood can drain your nest egg. And if you’re a member of the sandwich generation and also caring for your parents, you’re probably spread fairly thin in terms of your time, finances and emotions.
If that describes your personal situation, it’s critically important to understand the entire financial picture – yours, your childrens’ and your parents’ – including insurance, savings, assets and debt. You should also explore all possible tax breaks and government benefit programs available to Canadians who are caring for adult dependents.
The crowded nest trend is driven, in part, by financial constraints facing today’s young adults. They may be staying in school longer to effectively compete in the job market and, with the steadily rising costs of a post-secondary education, find themselves strapped with big student loans when they graduate. Or it may simply be that housing costs are the financial roadblock to your child’s ultimate desire for independent living.
For many young adults, living with parents is a fiscally responsible decision even when they are working full time. It can be an ideal way to save for a house or start a business. But you do risk a drain on your finances. The key is proactive planning to help them (and you) cope with the costs. For example, if your at-home child is pursuing an education and if your Registered Education Savings Plan (RESP) doesn’t cover the cost of their post-secondary studies, talk to a professional about strategies that will help avoid hefty debt.
Your professional advisor can also provide sound advice to your adult children about how to leave the nest in good financial shape.
In fact, your professional advisor can help bring your entire financial picture into focus and allow you to balance all your priorities without sacrificing your own long-term financial plan.
This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at [email protected]
