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Don’t let boomerang kids derail your retirement

You can help your adult children living at home, but don’t risk your financial future.

Perhaps your job is safe. Or maybe you’re already retired and feel financially secure. But what happens if you suddenly inherit a boomerang kid?

Let’s say your 45-year-old son loses his job, gets divorced or suffers a financial setback, and if he has little or no savings, he may lose his home and need to move in with you. And he’ll bring his spouse and children with him. Along with their two dogs.

That’s called a boomerang kid, an adult child who moves back in with their parents, usually due to financial hardship.

And if this happens, you might also become a member of the sandwich generation, a growing segment of the population who had to care for a child and an aging parent. And it’s a huge responsibility that could impact your financial future.

Of course, you love your children and you’ll welcome them home. But get ready for an immediate increase in your household expenses.

Food costs will rise. Electricity and water bills will increase too. You might also be asked to help pay for their student loans, car payments, auto insurance, cell phone and credit card bills, and subscription services.

All this can put your own financial security at risk. Fifty percent of parents with boomerang kids say they have sacrificed their retirement savings to financially assist or support their adult children, according to Bankrate.com.

And even if your kids aren’t part of the boomerang generation, with millions of Americans still out of work, it might be your parents, siblings or friends who need you. Although they technically aren’t boomerang kids, the effect is the same – and while it is wonderful that they all know you’re there for them, especially in a crisis like this one, it’s equally important to soberly and objectively evaluate your financial ability to help. (Emotional ability is another topic!)

If helping your boomerang kids financially is jeopardizing your retirement security, here’s what to do: Set the rules at the start. Have a direct, blunt conversation with them, laying out exactly what you will do and how long you will do it, and what you expect from them.

This is an important step. By establishing up front the type of support that will be provided as well as addressing the elephant in the room – when should a child move out – you’ll (hopefully) avoid conflicts down the line.

For example, you might say that you’re willing to have them live with you for six months, or that you’ll pay their phone bill for three months. And while they’re under your roof, they must agree to pay for groceries and do certain household chores. Putting all this in writing might prove helpful to everyone.

Having this conversation might be uncomfortable, but failing to talk openly could result in resentment – by everyone.

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