Baby boomers who are facing the prospect of their kids returning to live at home must plan for the financial impact on their retirement savings, according to the results of a new survey from Toronto-Dominion Bank (TD).
The survey of both millennial and baby boomer clients finds that the phenomenon of millennials returning to live at home with their parents is impairing the ability of the older generation to save for retirement.
The survey found about 25% of boomers report that they are providing financial support to either their children or grandchildren, 62% of boomers say this is preventing them from saving enough for their own retirement, and 58% report feeling financially stressed as a result.
Thus, boomers should plan to deal with the financial impact of supporting their adult offspring, TD recommends, advising that both parents and children should discuss the household budget and operations and that this planning should include a deadline for ending financial support.
“As you approach this date, set up a series of mini-goals that will allow you to free up funds to divert toward your retirement savings while ensuring that your kids are meeting the savings targets they set in their own financial plan,” TD says.
“While the déjà-boom effect may be an unexpected event in retirement planning, it is important for pre-retirees to remember that it’s not too late to plan for the future and achieve their goals. A lot can be accomplished in the 10 to 15 years before retirement and planning ahead is a key step in making the journey as smooth as possible,” adds Rowena Chan, senior vice president, TD Wealth Financial Planning, in a survey.
The online survey of 523 millennials (aged 18 to 34) and 365 non-retired Boomers (aged 52 to 70) was completed online between Oct. 21 and Nov. 3, 2016. The margins of error for these samples is +/-4.3%, 19 times out of 20 for the millennials and +/- 5.1% 19 times out of 20 for boomers.
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