Returning to the nest
What it means to your financial life
Compared to previous generations, children are living with their parents much longer and many are returning to the nest for any number of reasons – most of them financial. Check out these re-nesting numbers
- 42 per cent of young adults age 20 to 29 live with their parents – a significant increase from 30 years ago.
- 63 per cent of young men and 55% of young women age 20 to 24 live with their parents.
- Almost 25 per cent of young adults who live in the parental home have left at some point in the past.
The good news side of those stats is that when your children live at home longer, you’re less likely to experience sadness about an empty nest – when it eventually happens. The not-sogood-news is that supporting your children well into adulthood can drain your nest egg. And if you’re a member of the sandwich generation and also caring for your parents, you’re probably spread fairly thin in terms of your time, finances and emotions.
If that describes your personal situation, it’s critically important to understand the entire financial picture – yours, your childrens’ and your parents’ – including insurance, savings, assets and debt. You should also explore all possible tax breaks and government benefit programs available to Canadians who are caring for adult dependents.
The crowded nest trend is driven partly by financial constraints facing today’s young adults. They may be staying in school longer to effectively compete in the job market and, with the steadily rising costs of a post-secondary education, find themselves strapped with Managing Your Money big student loans when they graduate. Or it may simply be that housing costs are the financial roadblock to your child’s ultimate desire for independent living.
For many young adults, living with parents is a fiscally responsible decision even when they are working full time. It can be an ideal way to save for a house or start a business. But you do risk a drain on your finances. The key is proactive planning to help them (and you) cope with the costs. For example, if your at-home child is pursuing an education and if your Registered Education Savings Plan (RESP) doesn’t cover the cost of their post-secondary studies, talk to a professional about strategies that will help avoid hefty debt.
Your professional advisor can also provide sound advice to your adult children about how to leave the nest in good financial shape.
In fact, your professional advisor can help bring your entire financial picture into focus and allow you to balance all your priorities without sacrificing your own long-term financial plan.
* Source: Statistics Canada. 2011 Census This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc., presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances. Sleep Country Canada donated 14 beds, pillows, mattress covers and sheets to Anderson House during a presentation at its new Charlottetown store. From left are Lynn Martell, Sleep Country, Bryce Arsenault, Sleep Country, Danya O’Malley, P.E.I. Family Violence Prevention Services, Zachery Marsh and Christine Magee, Sleep Country Canada co-founder and executive co-chair. “We know women and their children are the ones most likely affected by domestic violence. On any given day in Canada, more than 3,300 women, along with their 3,000 children, are forced to sleep in an emergency shelter to escape domestic violence,” says Magee. “Facilities like Anderson House are critical to helping women affected by domestic violence. Providing new beds to Anderson House is something meaningful we could do right away to give back to this community. We hope that with a better night’s sleep and the safety and support of Anderson House, these women can start to rebuild their lives.”