Empty Nesters’ Emptying Coffers

Full disclosure: I’m a softy when it comes to helping my grown kids. I frequently find myself opening my wallet more than I should, especially during this “giving” holiday. Not that they ask for it, just that I see needs in these lives I cherish, always have, and am probably quicker than most to contribute to the cause.

So I’ve been nagged ever since I came across this release from the SUM180 site about this study by the Boston College Center for Retirement ResearchDo Households Save More When the Kids Leave Home?

The answer to that question appears to be, in the words of SUM180, “not as much as you might think.”

Carla Dearing, the online financial-planning service’s CEO, doesn’t mince words in suggesting why empty nesters are only able to sock away 0.3 percent to 0.7 percent more than they were able to when they had much bigger bills and children in school.

“Among the explanations [are] empty nesters’ continued financial support of adult children,” she says. “Picking up their grown kids’ expenses — student loans, insurance, auto payments, smartphone bills — is a generosity those who have not yet saved enough for retirement can ill-afford.” She goes on to stress that:

“Those in their 50s — typically — are ideally positioned to accelerate their retirement savings: They’re at the peak of their earnings, the mortgage is paid and the kids are finished with college and out of the house. As this is possibly their final chance to ensure their retirement is financially stress-free, directing more into retirement savings must be their top priority.”

OK, I get that. I have been upping my 401(k) contributions fairly regularly. And I’m not picking up my grown kids’ living expenses as a matter of course. But oh is it ever hard to turn my back on those unforeseen needs in their stressed-out lives and the little lives they’re now raising. Yet that’s what Dearing is telling me to do. Get more selfish about my own survival. As her release says:

“Think of it as putting the oxygen mask on your face first. It may feel counter-intuitive, but, after all, your security in retirement is something your children want for you, too.”

I don’t think I’m alone in this baby-boomer weakness, fallacy, foible … call it what you will. And I do think it’s a problem specific to us boomers, not just because of where we are in our lives as parents, but because of where our heads are as parents as well. We’ve always wanted everything for our kids. We’ve always been willing to do everything in our power to see them not just make it, but succeed. How can we now dial this back and take better care of our own retirements? And is there something HR leaders can do to help this along in the workforce?

I put these questions to Dearing. She had some suggestions and observations worth sharing and thinking about:

“Too many boomer parents have a hard time drawing the line when it comes to helping their grown kinds financially, even when their own financial security is at stake. Helping your employees address this issue can have a big impact on their financial wellness, but it’s tricky. Dealing with money is always emotional; this is particularly true when family is involved.

“From an HR leader’s perspective, the challenge is to help employees make decisions about money and their children from a place of clarity and strength, rather than uncertainty and emotion.”

Here’s what she suggests, not just for boomers, but as talking points for the employers trying to help them:

“First, break through the emotional fog with real information. Give employees access to tools that help them get a handle on their own financial situation. You can encourage your employees to read books or attend workshops about communication and boundaries, you can keep trying to ‘educate’ parents about the importance of saving for retirement versus supporting grown kids financially, but in my experience, nothing beats real information for helping parents draw the line with their adult kids financially.

“The truth is, ‘putting on your own oxygen mask first’ is much easier when your eyes are wide open about your own financial shortfalls. When employees have a clear understanding of what they, themselves, need to regain control of financially, their priorities can naturally self-correct. Real information takes the guesswork out of the question, eases the emotional pressure and gives parents a rational framework for deciding whether they can truly afford to help.

“Second, bring the language of business to conversations with grown children about money. Chances are, your employees already know how to navigate business conversations with skill, tact and resolve. Show them that they can apply the same principles to financial conversations with their kids, and that this can go a long way toward defusing the emotion involved and arriving at sound decisions as a family. Some specific tactics worth sharing:

  • If a child wants to borrow money, the parent or parents should set up a meeting dedicated to discussing the loan and nothing else. Keep the meeting free of distractions such as household chores or family activities.

  • The parent or parents should maintain a businesslike tone and attitude throughout the conversation. If a child wants a loan, the parents should require a repayment schedule and an interest rate that they can be happy with.

  • Practice makes perfect. Saying no to one’s kids may never get easy, but it will get easier as they get used to approaching financial conversations in a rational, businesslike way.

“Let me close with a story that I think illustrates these two points. My client, a woman age 49, had a business that was doing fine, but not great. As we worked on her financial plan together, she realized two things: 1) Looking hard and honestly at WHY her business was underperforming, she was forced to admit that her son, the business’ controller, was not the best person for the job, and 2) She had a limited window of opportunity — 10 more years — to save and prepare for retirement. These realizations gave her the push she needed to finally give her son 12 months’ notice. Her son received plenty of time to transition elsewhere and she was able to start growing her business into the source of retirement income she needed it to be.”

Though I’m not running a business, therefore thankfully don’t have to think about firing one of my own kids, I do think having more resolve to “just say no” when my giving spirt goes into overdrive needs to be a New Year’s resolution. Or maybe it’s time to sit down and have that financial talk with them (though I think I’ll wait till after the holidays).

After all, I’ll be handing my retirement reality over to them one day. We should all be on the same page.