Kids crimping on your retirement? Cut ’em free

If your live-at-home son’s motorcycle trumps your RRSP, it’s time to say goodbye.



From the September/October 2010 issue of the magazine.


kids retirement home
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

65 comments on “Kids crimping on your retirement? Cut ’em free

  1. The couple should just sell their home and move to their home town and take the kids with them. Kids can either go with them or start looking for a place.

  2. Wow – I can't believe people are clueless enough to need advice on this issue. When my youngest brother seemed adrift after high school, my mom told him he had one year to live at home and work at the gas station, then he either had to be in school or out of the house. During that time, he hinted to her that one of his friends had bought a really awesome car. Her response was, "Well, if you can afford a car, you can afford to move out." He didn't buy the car, and the next fall he was enrolled in technical college. Her friends all thought she was MEAN and PRESSURING him. Darn right she was pressuring him, and he had graduated and gotten a decent job when some of their useless sons were still living at home and working part-time at Safeway.

  3. Yup, tough love is the appropriate response to slacker kids, Heather. Got to be firm. However too many parents themselves are clueless about how to react to their freeloading slacker off spring who were mollycoddled and spoiled in many cases. And often the parents themselves lack moneysense.

    My parents never directly gave me money advice but I learned as a kid through their example of thrifty behaviour.
    I made the mistake thinking my adult son would be the same way but he turned into a spendrift and when I finally woke up, I sat him down to explain the financial facts of life and drew up a budget and he responded postively and made a complete turnaround.

  4. Financial education starts at an early age and is reinforced, taught and reviewed all along the way until they reach the time they leave for post secondary education. By that time it is understood what the value of a dollar is and the importance of education!

  5. My older daughter spent two years at a local college, going part time and drifting along. I finally told her she had 3 choices – 1) go to school full time and live at home for free, 2) work full time, stay at home and pay rent, or 3) move out and do whatever she wanted to. But in any case, the first step was to work full time in the summer. She chose to work full time in the summer and go back to school full time in the fall. My younger daughter is under no illusions. I've already made it clear that I plan on selling the house after she graduates from high school in two years.

  6. My younger son dropped out of school 5 years ago. Before my wife and I picked him up at campus residence, we renter a room for him in the city. We picked him up and dropped him off at the rental housing. We paid 3 months rent to the landlord, and gave our son 3 months grocery money. I said to him "Son, you are now on your own! We could do lunch, but make sure you call first; we could be busy, you know!" He has been on his own for the last 5 years. Although he is not making a lot of money, but he is financially independent for now. We are still waiting for him to realize that he has to go back to school for an education.

  7. Pingback: Kids crimping on your retirement? Cut ‘em free | The Pinata Post

  8. Pingback: Used Machinery

  9. There are a lot of strange comments on here. SCK WAS HERE

  10. Hello this is kind of of off topic but I was wanting to know if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding expertise so I wanted to get advice from someone with experience. Any help would be enormously appreciated!

  11. An impressive share, I simply given this onto a colleague who was doing somewhat

  12. Yet another intelligent blog! Really looking forward to more!

  13. Pingback: Small Business Downloads – 5 Free Solutions That Can Save You $1000′s, Part 1

  14. Pingback: buy proactol plus

  15. i was just browsing along and came upon your site. just wanted to say great website and this post really helped me.

  16. Pingback: Check out my FB profile

  17. Pingback: Fathers Day Gifts

  18. Pingback: Black Friday 2011

  19. Pingback: Sweaters On Sale

  20. Pingback: microwave ovens

  21. Pingback: Spine Institution

  22. Pingback: natural hair color

  23. Pingback: Sports Tickets

  24. Pingback: Sober Living

  25. Pingback: steam iron sale

  26. Pingback: Syrup for Snow Cones

  27. Pingback: Acne Skin Care Product

  28. Pingback: Gold Buying Business

  29. Pingback: Hebergement Ile Maurice

  30. Pingback: internet search engine optimization

  31. Pingback: Acai Berry scams

  32. Pingback: Louer Ile Maurice

  33. Pingback: Proxy Service

  34. Pingback: Location Vacances Ile Maurice

  35. Pingback: Louer Ile Maurice

  36. Pingback: Laptop Batteries

  37. Pingback: Online Paralegal Courses

  38. Pingback: Wooden Doghouse

  39. Pingback: make money online from home

  40. Pingback: seo

  41. Pingback: compare holidays

  42. Pingback: sacramento roofing

  43. Pingback: kitchen remodeling sacramento

  44. Pingback: Best Online Dating Sites

  45. Pingback: Location Ile Maurice

  46. Pingback: san antonio roofing

  47. Pingback: Whole Life Insurance Rates

  48. Pingback: Mauritius Villa Rental

  49. Pingback: lap band surgery costs

  50. Pingback: What Is Adoption

  51. Pingback: Buy Stair Lifts

  52. Pingback: peak property and casualty insurance

  53. Pingback: Cheap Car Insurance Quotes

  54. Pingback: Credit Card Consolidation

  55. Pingback: Buy Kratom

  56. Pingback:

  57. Pingback: Bath Salts

  58. Pingback: Acne No More Review

  59. Pingback: sexless marriage counseling

  60. Pingback: Keurig Reviews

  61. Pingback: Schwinn 240

  62. Pingback: Marriage Problems

  63. Pingback: relationship Problems

  64. Pingback: עבירות מס