Don't Let Your Boomerang Kid Steal Your Retirement

“Son, I love you, but you can’t come home right now.”

It was raining and I was devastated. Little did I know that as I stood there at the convenience store pay phone, my mom was teaching me a lesson I would never forget. About three weeks into my first semester at Catawba College, I was miserable and just wanted to come home…but my parents weren’t having it.

Over the years in my role as a financial advisor, I’ve seen the same scenario play out time and again with other folks. It’s been a rude awakening for many people I know when their baby bird sails from the nest, only to return right back home.

They call them “Boomerang Kids” and they just might want to steal your retirement.

Now, more than ever, young adults are moving back home with mom and dad. According to a recent Pew Research Center study, 36 percent of all millennials (ages 18-31) live at the home of their parents. As a father of three boys, that means that (statistically speaking) one of my sons will spend more time with me than I’d originally anticipated and my guess is I wouldn’t be the only parent surprised by this trend. Rather than focusing on the children and why this is happening, I want to focus on -you- as a parent and I want to warn you now:

Don’t let your Boomerang Kid steal your retirement!

Now, of course, you have to help your kids in some fashion, so I am not saying that you should abandon them or feel as if you shouldn’t do anything to help. What I am saying though, is that it’s important to remember that in order to be of help to your kids, you have to be on sound financial footing first.

There’s a reason that flight attendants suggest putting on your mask BEFORE trying to assist other passengers!

If you find yourself in this situation and want to get ahead of the game, here are some simple steps to make sure that both you and your child come through the experience (relatively) unscathed:

  1. Meet with your financial advisor to determine how your child returning home might affect your life plan

This is important, because most life plans are based on an estimated saving and spending rate and you’ll want to make sure that your arrangements with                 your child(ren) take -your- needs into consideration.

      2. Figure out how much of their expenses you’re able and willing to cover – and for how long 

Note the order – able and willing – because your ability is more important here than your willingness. Remember, this isn’t a test about how much you love               your children. We want to help them learn to help themselves one last time.

  • Contributions: What will they be contributing to home while they’re there? During my call home, my dad reminded me, “The only people who live in our house go to work or to school.” Your child should be contributing to your home in some financial way, whether it be paying rent or cutting the grass so that you can reduce lawn care expenses. Remember, most people get a job because they -HAVE- to get one.
  • Late penalties: Establish late penalties for payments due and actually enforce them. If your child is going to move back home, use this time as a valuable instructional opportunity. Their next landlord (and like it or not that’s what you are) won’t let them be late.

      3. Set a time limit for their stay

Every tenant agreement has a term after which the landlord can end the arrangement.

  • Length: How long will they be staying with you? You can be fair, but set a limit and be clear about expectations. How long children think it’s appropriate to stay, can be very different than how long you might want them to stay.
  • Scale of Services: As they near their departure date, it’s okay to make them less comfortable by removing your financial support in other areas. Transfer their cell phone bill to them, their car taxes or insurance…you get the idea. The goal is to reduce their financial dependence on you so that you can redirect those funds toward your retirement (after all, they’ll need you retired before long so you can save them money on daycare.)

4. Help them find a mentor

The ultimate goal is to help your kids be financially independent.

  • Financial Planning: Introduce them to your financial advisor so they can begin developing their own plan. If you don’t have an advisor or your advisor doesn’t really “do planning,” email me or reach out to us on Facebook and we’ll be glad to help them get off on the right foot. In addition to our Senior Wealth Advisors, we have associates who are closer to their age who can easily relate to them.
  • Mentoring: If possible, introduce them to someone in their preferred line of work. I’ve had the benefit of several coaches and mentors over the years who had varied experiences from my parents. I learned as a Small Fry coach at Maple Park, that my sons would much rather take baseball instruction from someone other than me. The same applies here.

If you’re a parent dealing with a Boomerang Kid, don’t worry, you’re not alone -and- this time will pass.

Remember that kid at the beginning of the story who wanted to leave college and thought his world was over? Well, he survived. Because my parents stood their ground, I was forced to be responsible. I did end up leaving Catawba, but instead of coming home, I decided to attend Clemson. I graduated, left the nest without returning and eventually found my way into the career that I truly love. With a little luck and some sound financial and life planning, your Boomerang Kids can do the same.

If you have questions about how to turn the life you have into the life you want, we’ve listed several ways below that you can contact us.

Reach us at our offices:

(843) 519-1100

135 South Dargan Street

Suite 200

Florence, SC 29506

Reach us online:

Signaturewealthstrategies.com

Facebook.com/signaturewealthstrategies

Twitter.com/asignaturelife

Linkedin.com/company/signature-wealth-strategies

*Any opinions are those of Chip Munn and not necessarily those of Raymond James.  Investing always involves risk and you may incur a profit or a loss.  No investment strategy can guarantee success.  Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC and Signature Wealth Strategies is independent of Raymond James Financial Services, Inc. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Chip Munn and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investors should consider the investment objectives, risks, and charges and expenses of exchange-traded funds carefully before investing. The prospectus contains this and other information about mutual funds and exchange -traded funds. The prospectus is available from your financial advisor and should be read carefully before investing.

Click here to see this article in VIP Magazine’s July 2016 issue:

July Issue, VIP Magazine

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About Chip Munn

Managing Partner, SWS Senior Wealth Advisor, RJFS Chip is a Magna Cum Laude graduate of Clemson University, where he earned a degree in education and was selected as an Academic All American by USA Today. He began his career in finance as a financial consultant with Wheat First Union in 1998. He specializes in retirement and education planning and the transfer of wealth among generations. In 2015, Chip was ranked among the top 10 regional advisors under the age of 40 by On Wall Street magazine. This list, comprised of advisors from regional brokerage firms, recognizes advisors whose practices are the best in their field nationally.  Chip lives in Florence with his family. His community service credentials include secretary of the McLeod Foundation Board and a member of the Florence Downtown Development Board.  He has also held as past board positions with the Florence Family YMCA and The School Foundation. Follow Chip on LinkedIn.

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