Time to emphasize the boomer in boomerang. Millennials and younger Gen Xers are on the precipice of caring for aging parents who could soon be boomeranging into their homes.
This year, the eldest baby boomers will turn 77, and those born in 1964 (the tail end of the generation) will turn 59. It may seem early to raise the warning that millennials should start to strategize how to care for their parents, but not so much when you consider life expectancy rates. For women in the U.S., it’s 79.1 years, and for men, it’s 73.2 years, according to CDC data.
That means boomers are rapidly aging into a phase of life in which they may require help or simply don’t want to live alone. And no one wants to talk about it, apparently. About 42% of Americans would prefer to discuss their parents’ funeral plans than their financial ones, according to a recent survey from Wells Fargo and Ipsos.
Frankly, that’s horrifying. Failure to have forthright conversations about a parent’s ability to retire or an adult child’s ability to support an aging parent could result in financial disaster for all parties involved. This is especially true if the need to provide care is unexpected and there are no safeguards in place such as affordable housing, long-term care insurance or adequate health-care coverage.
In 2021, about 48 million people provided unpaid care to an adult family member or friend; 80% of them incurred regular out-of-pocket expenses, with the typical annual cost totaling $7,242, according to an AARP survey.
Before anyone reaches the point of providing care, it’s important parents and adult children have discussed what the future could and should look like.
Multigenerational homes are a cultural expectation around the world but not necessarily the norm for American families. However, their economic environment -- or simply the realities of aging -- may force boomer parents, adult children, their spouses and children to reside under one roof together. It’s critical that those without the cultural expectation of a multigenerational home start to lay the framework for a harmonious dynamic. Step one? Frank conversations around financial realities and expectations. Step two? Plenty of healthy boundaries.
Discussions should center on just how financially prepared a boomer parent is to retire. The average Social Security monthly benefit for retired workers as of November 2022 was a mere $1,677.52, according to the Social Security Administration. That’s unlikely to cover living costs for the majority of retirees, despite Social Security being the primary means of income for many retired people.
In 2017, 49% of adults from the ages of 55 to 66 had no personal retirement savings, according to the U.S. Census Bureau’s Survey of Income and Program Participation. While that’s an old figure, it’s hard to think there’s been much improvement given the pandemic, stock market volatility, inflation and overall age of the demographic. Even if a parent has the additional cushion of a defined benefit pension or defined contribution plan, it’s important to run the numbers and determine if it will be enough to allow a retiree to cover the basics and age with dignity.
Unfortunately, this is an area in which many parents seem reluctant to have a vulnerable conversation with their adult children. It’s understandable given that a boomer parent could’ve worked hard their entire life, done what they thought was right in terms of building a retirement fund and caring for their family, and yet the coffers may still run dry early. No one wants to feel shame or embarrassment.
Despite the discomfort, it’s critical that parents and adult children have retirement and estate planning conversations early, especially before there is an inciting incident like an accident or health scare. Sharing expectations and making plans early will allow time to prepare both financially and mentally for a future change. It’s also worth researching if the care an adult child is providing to a parent could entitle them to a tax credit for “other dependents.”
Adult children and aging parents need to share financial information with each other to determine the best way to provide care and support. Living together in a multigenerational household could ease some of the financial strain on both generations simply by consolidating resources. There’s also the added benefit of providing help to each other in terms of household labor, child-rearing and eliminating the potential of social isolation.
However, much like cohabitation for unmarried couples, consolidating resources doesn’t necessarily mean combining. Both parties need to discuss how they’d like bills prorated and paid and how they envision handling their finances after moving in together.
The creation of a multigenerational household does warrant establishing new boundaries, especially around the rearing of little ones. Fundamentally, the parents of the children set the rules that need to be respected by the grandparents.
Grandparents can certainly have boundaries of their own, including not being default child-care providers, but they should have an open dialogue with their adult children about desired parenting and discipline styles. An adult child may elect to parent differently than how she was raised. It’s not an indictment of the grandparents’ parenting style, and it’s critical the boomer parents don’t feel attacked or judged because their children are electing to parent in a different way.
For their part, adult children need to be aware of the ways in which they’re trying to parent their parents. Yes, parents age and may reach points at which they’re no longer physically or mentally capable of handling the tasks they once could, but to infantilize them isn’t the answer, either. It’s important to allow an aging parent to still have autonomy and create an environment in which as much freedom as possible can still be safely granted.
No matter how well a family functions, there are bound to be disagreements and uncomfortable moments during the process of creating a multigenerational household, or simply trying to provide financial, physical or emotional help to an aging parent. The goal is to create an ecosystem in which both sides are respected and, dare I say, viewed as equals.
Erin Lowry is a Bloomberg Opinion columnist covering personal finance. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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