Struggling with Finances in Retirement after Son's Post-Divorce Request for Homesteading
As more adult children return home after a divorce, retirees may find themselves in a challenging position. To navigate this situation, it's crucial to establish clear ground rules to avoid upending the finances of the retired parent.
Christina Lynn, Director and Wealth Strategist at Mariner, advises, "When considering supporting an adult child, ask yourself, 'How much can I give without sabotaging my finances?'"
Open Communication and Defined Expectations
Open communication about expectations around finances, household responsibilities, and the duration of the adult child's stay is essential from the start. This transparency helps both parties understand their roles and responsibilities, preventing potential misunderstandings.
Setting a Realistic Time Frame
Establishing a time frame for when the adult child will move out is important to prevent an extended stay from becoming permanent. A defined exit plan ensures that the arrangement does not strain the retiree's finances long-term.
Charging Rent or Contributions
Charging rent or contributions to household expenses can offset increased costs like utilities, groceries, and maintenance. This practice not only helps the retiree manage their finances but also encourages the adult child to contribute to their living expenses.
Recurring Check-ins and Clear Move-out Dates
Regular check-ins help evaluate progress and reaffirm plans for moving out. These meetings ensure both parties stay aligned and avoid resentment. Having a clear move-out date provides a sense of direction for both the retiree and the adult child.
Exploring Alternatives
In some cases, having the adult child move back home may hurt the retiree's retirement security. In such situations, alternatives like helping pay rent elsewhere temporarily should be considered. The goal is to support the adult child without compromising the retiree's long-term financial security.
Maintaining Boundaries
It's essential to keep clear boundaries to balance helping your child and preserving your own financial and emotional well-being. This balance helps maintain a healthy relationship between the retiree and the adult child during a transitional and often challenging time.
Ryan McLin, Founder and Lead Financial Advisor at Impact Wealth Group, emphasizes, "Your child should have some skin in the game." He suggests that the conversation should resemble a roommate agreement rather than returning to the days of taking care of a dependent child.
Consulting a financial advisor can help ensure that prudent decisions are made when considering supporting an adult child. By being honest with both the child and oneself, retirees can support their adult children without jeopardizing their future.
According to a recent survey, a significant number of parents (46%) say their adult children, ages 18 to 35, are moving back home. With these statistics in mind, it's clear that the need for clear ground rules and open communication is more important than ever.
In light of the increasing number of adult children returning home, it's vital to discuss personal finance, household dynamics, and relationship expectations. This open dialogue, paired with setting realistic timeframes, charging rent or contributions, and establishing clear move-out dates, can help maintain financial stability for both parties. A financial advisor can provide valuable guidance during such decisions, ensuring that choices support the needs of both the retiree and the adult child, while also preserving long-term financial security.
