Some baby boomers jeopardized their retirement by helping family during the pandemic
Baby boomers’ generosity toward their loved ones is leaving them in a vulnerable financial state that could postpone their golden years, according to a new survey.
Two in 5 boomers reported they had to financially support other family members during the pandemic, according to a new survey from CNO Financial Group that polled more than 2,500 middle-income boomers and with less than $1 million in investable assets. Of those, 98% said the pandemic had an impact on their retirement plans.
Read more: 3 surprising facts about Social Security
Three-quarters reported not being able to save as much for retirement, two-thirds delayed moving plans, and half reevaluated finances and retirement expenses, the survey found.
The pandemic put family lending “on steroids, so to speak,” said Jordan Benold, a Frisco, Texas-based certified financial planner, remarking that job losses or income interruptions have caused families to lean on each other financially.
Among Benold’s clients, several former empty nesters now have full houses since they’ve welcomed adult children, some with children and pets of their own, and siblings since the pandemic’s onset.
But some aren’t just opening their homes, others have extended their financial support to bridge employment gaps, and some are bootstrapping their adult children’s business ventures. Benold shared that one client is using their nest egg to lend “money to their kid so they can continue their career” after a misguided business decision.
Read more: Ask the expert: What is Financial Independence Retire Early (FIRE)?
Parental support of adult children pre-dates the pandemic and is an all too common scenario among clients, said Thomas Balcom, founder of Florida-based 1650 Wealth Management.
“Nobody plans when they're planning for retirement on helping their adult children, but it can be a pretty costly endeavor,” he said.
That support often doesn’t stop with adult children and it extends to the next generation.
“Sometimes you have parents who want their grandchildren to have a better education so they'll pay for private schools or college tuition because the parents don't have the money or the funds,” Balcom said. “The guilt is a factor as well.”
Read more: 3 key factors to consider when planning for retirement
For Balcom, the “worst part” of his job is offering financial advice that, while pragmatic, could come across as callous when he sees that the generosity clients show to their families is endangering their financial future.
“We don't necessarily have an emotional attachment to the kids or the people living with them,” Benold added. “But we also realize that this is their family and they need to do what's best for the family and you can't let the family go under.
“It's a double-edged sword,” he said.
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.