In their mid-fifties, Susan and Brett are starting to seriously think about retirement. Their dream is to sell their Whitby, Ont., house and move back to their hometown on the East Coast. But their retirement dream is on hold. Despite their defined-benefit pension plans and their sizable RRSPs, Susan and Brett can’t sell their home because of their kids.

Susan and Brett (they didn’t want to reveal their last name) are parents of two adult children, both in their 20s, and both still living at home. The situation is partly due to the poor job situation, explains Susan, and partly because the kids lack incentive to save for the future. For instance, Susan’s son—a 23-year-old working man who pays only $200 in rent each month for room and board—recently withdrew all his savings to buy a motorcycle. “We are considering giving him a definitive move-out date, but it’s hard to compete with his desires,” says Susan. “They want to have everything now and only the best.”

Susan and Brett’s predicament is now the norm. According to the 2006 Canadian Social Trends report, more than 60% of children aged 20 to 25 now live with their parents. Merrill Lynch Affluent Insights Survey shows that nearly a third of affluent boomers have diminishing retirement savings due to their assistance to both their aging parents and their kids. And the problem isn’t just adult kids returning to the nest—it’s also about them looking for bailouts long after they’ve moved out.

Chet Brothers, a financial planner at Regina-based Brothers & Company, says financial literacy isn’t taught in school, so parents need to step in. “We’ll take them out for hours to teach them how to parallel park, but few of us sit our kids down at the dinner table and talk about money, budgeting and investments.” So don’t simply cut a cheque when your kid asks for a bailout, he says. Instead, get involved with their finances. “That $6 coffee, or that MacBook purchase are wants, not needs, and every child needs to learn the difference.” You can also take them to a non-profit credit counselling service so they can learn how to budget. “But if the child is unwilling to take responsibility and make changes, don’t give them the money,” he says.

For kids forced to move back home, Brothers suggests working with them to set specific targets for paying off debt and saving money and setting a date to move out. And don’t be afraid to charge rent. Warren Baldwin, a financial planner with T.E. Wealth, says paying rent forces children who aren’t working to take the first step to independence—getting a job. The rent doesn’t have to be the market rate, but it shouldn’t be so small that your kid barely feels a dent in their disposable income.

In Susan and Brett’s case, Brothers says they should insist on input into their children’s financial decisions. By holding their kids accountable and setting limits, he says they can turn their retirement dreams into reality. And if that doesn’t do the trick, and six months later their son is still living at home, Brothers says the couple shouldn’t feel bad about telling him to pack his bags.cutemloose_1009_322