Struggling to Manage Finances After Retirement as Son Seeks to Return Home Following Divorce - Advice Needed
When an adult child returns home after a divorce, it's crucial to set clear financial ground rules to protect both parties' interests and prevent misunderstandings.
Two financial experts, Christina Lynn, Director and Wealth Strategist at Mariner, and Ryan McLin, Founder and Lead Financial Advisor at Impact Wealth Group, offer guidance on navigating this delicate situation.
Defining the Time Frame
Establishing a clear and agreed-upon time frame for the adult child's stay is essential. A three or six-month arrangement, with an explicit exit plan, can help avoid an open-ended or indefinite arrangement that may unintentionally become permanent.
Sharing Financial Responsibilities
Defining financial responsibilities explicitly is also important. This may include deciding whether the adult child will contribute to rent, utilities, or groceries. Parents might consider supporting specific expenses, such as the child's cell phone or health insurance, conditional on their effort to work or find employment.
Regular Check-ins
Regular check-ins to discuss progress, financial contributions, and plans for moving forward are recommended. These meetings help manage expectations and maintain good communication.
Honesty and Realism
Being honest and realistic about your own financial limits is crucial. This helps avoid compromising your retirement security or personal finances. Seeking a financial advisor's help can ensure decisions are prudent and sustainable.
Alternative Support Options
If having the adult child physically at home is challenging, alternative support options can be considered. These might include helping cover rent elsewhere, legal fees, or other costs to assist without full cohabitation.
By putting these ground rules in place, parents can support their adult child through a difficult transition while protecting their own financial well-being and the family relationship.
It's important to communicate these conditions upfront to prevent conflict, and always keep flexibility for adjustments depending on progress and circumstances.
Statistics
- According to a 2022 report, the median retirement savings balance among Americans 65 to 74 is $200,000.
- 64% of Americans worry more about depleting their nest eggs than passing away.
- An astounding 46% of parents say their adult children, ages 18 to 35, are moving back home.
In conclusion, supporting an adult child at home doesn't have to jeopardize retirement dreams. By setting expectations and boundaries, parents can help their child while maintaining financial stability and family relationships.
In set financial discussions regarding the situation, personal finance matters such as shared responsibilities, rental fees, utilities, and grocery costs should be considered, and the adult child might be required to contribute to some of these expenses to sustain the household. Moreover, relationships within the family dynamics could also benefit from open communication about individual financial limits, ensuring that financial support does not compromise one's retirement security or personal finances.
