How will “Back-in-the-Nest Parenting” Affect My Plans?

By: Kevin-Barry Henry, #1 Bestselling Author

Young adults today face many challenges that generations before them did not, especially financially. They are saddled with enormous education debt and working for the same company the next 35 or 40 years just doesn’t happen anymore. Today’s young adults live in the “gig economy” and they often need their parents help. There has been a trend of late that sees adult children moving back in with their parents. It has also given rise to Back-in-the-Nest Parenting.

Back-in-the-nest parenting simply means adult children return to live with their parents when they need help. It may be after a relationship breakdown or after graduating from Univesrity or college with some pretty impressive student debt or simply when the children’s financial plan has hit a speed bump and need your help. Back in the nest parenting is becoming increasingly popular as adult children flock back home to the nest for their parents’ help, room and board and a full fridge.

In my own case a few years back, after my divorce and assets where divided, I ended up with some furniture, some debt and my dog Moses. When I told my father, he simply said “you and Moses can come back home and live here until you get back on your feet”. And that was it, I became a back-in-the-nest adult.

I moved my furniture and my dog back into the only house I could ever call home, and my retired Dad (we call him Coach) put up with us without a single complaint. He provided a really great ear to listen to my moping stories while he helped me get back on my feet. A few months became 2 years. And I really enjoyed re-connecting with him as an adult. Our visits to his sister, my Aunt Colleen, will stay with me forever. They were cleansing and like a shower for my mind. She is my guardian Angel.

The reason I am telling this story about my past is because my father took me back in as a broke adult, and he is not alone. The extent to which this is taking place today is more than anyone would imagine. My generation and ones behind me are very lucky to have such a wonderful bunch of parents who will take us in when we need shelter.

What about my Plans?

Back-in-the-Nest children can have an effect on retirement plans. My dad lives a simple life and although he went to Florida every spring to check in on the Montreal Expos training camp when they still had a baseball team, he didn’t travel very far beyond our home and out cottage. My re-introduction into his home didn’t change his plans, but me and the dog probably annoyed him more than he will admit.

Not all parents who are recipients of the “Back-in-the-nest” generation are so lucky.

The newest trend among Canadian parents is helping to support their adult children and it is rapidly becoming the new normal. Young adults are struggling financially and their parents are more than willing to help out, and in some cases, do the heavy lifting. I know. It happened to me!

A New Trend?

According to the data available in the 2011 census in Canada, 42% of young adults of ages 20 to 29 live at home with at least one parent and that data is almost a decade old. That number was 27% back in 1981.

Staying with mom and dad for free is the most popular way for parents to help their kids says a poll conducted by the Canadian Imperial Bank of Commerce (CIBC) in 2015. That poll also found that 71% of the parents that were helping their children were using this now popular method.

Sometimes these parents will do more than simply offer a free room and a full fridge. They are helping with household bills, repaying debts and according the CIBC poll, they will not only do it for children who have moved back in, but also for children who have not (yet?).

Young Canadians are burdened like never before with massive student debt, a tough job market and incredibly high housing costs.

Kevin Mizgala, CEO and chief financial officer of Money Coaches on Salt Spring Island was quoted in a recent article of Investment Executive written by Wendy Cuthbert, and he has a different take on the current back-in-the-nest environment

“So-called helicopter parenting in which well-meaning parents hover over their kids to assist them, even into adulthood…. Even if the parents really can’t afford to.”

It is happening far more frequently than we realize and it sometimes means that parents must revise their plans so they can help their children get a foothold.

Adjust Your Plan.

There can be financial consequences regarding the erosion of your retirement nest-egg and your estate, but maybe your view is that they will inherit it anyway, they may as well have it now. That’s fine and a wonderful way to help to the kids. But what if you had other ideas? It’s pretty hard for anyone to tell parents that they can’t afford their children anymore.

All this is not to tell you to boot your kids to the curb so you can grow your estate. This article is about situations you may not have considered or been aware of, or maybe you are painfully aware of, and just want to figure out what the impact will be on your plan. It doesn’t matter if it unexpected illness or back-in-the-nest or anything else. If your family needs help – and it may that you need to help your parents rather than the reverse – I hope that you are able to respond in the same way my family did, and hopefully, you don’t have to get a second job to make it work.

The most common fear for people nearing retirement today is that of running out of money before you need to use your will. Mississauga-based Credo Consulting Inc. in partnership with Montreal-based TC Media’s Investment Group conducted a national survey for Investment Executive in 2016 and they found that 62% of Canadians under the age of 55 are in medium-strong agreement with the idea that they worry about outliving their finances, compared with 49% of the older participants who stated the same.

In an Investment Executive article by Tessie Sanci discussing the findings of the survey, Tim Cottee, vice president of retiree planning at Investors Group Inc. in Winnipeg states that “Many Canadians’ fears about their inability to afford retirement are unfounded.”  That is very comforting to hear, but it is still a good idea to make sure that you know where you stand.

You may already have an excellent retirement plan in place and even gone as far as doing some work on your estate transition. Having an adult child return home or back-in-the-nest, that will need your help means that you at least need to take a look where you stand and where you plan to be. The present has a way of interrupting the perceived future so take some time and adjust your plan accordingly.

When it comes to your estate plan and wealth transition, whether you decide to share your assets now or later, you might as well make sure that when they do finally get distributed, that you have a will, a plan and that they are all kept safely in an easy-to-find Estate Organizer! To that end you may want to get your assets and liabilities together and figure out where you stand. I wrote an article on this site that can perhaps get you started called “What is an Estate Organizer and Why You Need One”.

Life can be unpredictable and the point of this article is that sometimes there are unexpected events that can impact your plan, and you can’t really get around them. If you are able, try to adjust the sail, and keep the ship moving! I know firsthand what it can mean from the child who needs help’s perspective, and I will be forever grateful that I have such a wonderful family. I wish you the same.

With Gratitude,

Kevin-Barry Henry

THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.