The Baby Boomers take a lot of flack from other Canadians. There’s far too many of them, and that’s going to cut into the pension plans of other Canadians. And after Ottawa made changes to Old Age Security in their March budget, many told them to stop their whining – they were the ones that would be fine. While the fact that the OAS changes don’t affect most Boomers’ retirement plans is true, it doesn’t mean that things are going to be all rosy once retirement hits. This generation is facing a problem that their parents didn’t, and that’s having adult children living with them long after they’ve finished post-secondary education and have already started a life of their own.
No one ever wants to think of having their adult children with them as a “problem,” but the hard truth of it is that it can be – a big one. The problem comes when a parent has put aside money to help with a child’s education or their wedding, but not much more. But after the child moves back in, the parent then becomes responsible for their living expenses as well. The fact that the parent will pay for groceries and utilities is often a given, but Barbara Mitchell from Simon Fraser University in Vancouver says that parents also feel the need to help with cell phone bills, and even the child’s debt.
“Especially with middle-class type parents,” says Ms. Mitchell. “There is sort of this mentality that to be a good parent you need to care for every need of your child.”
Ms. Mitchell continues on to point out the real problem that this creates – it simply leaves the Boomer parent with no cash flow of their own, and can seriously hurt their retirement. Parents who once planned on selling their home and downsizing are now having to take out second mortgages. And money that was once earmarked for the Boomer’s retirement plans is now going to pay household expenses and that second Vancouver or Toronto mortgage.
Daryl Diamond, financial planner and author of Your Retirement Income Blueprint 2011 agrees with Ms. Mitchell saying, “This is cash flow that could be otherwise going to the retirement of the parent and is now finding its way into something that’s not going to impact the parent positively when they retire.”
Mr. Diamond also states that many Boomer parents are now left with two choices: to take a lower retirement income, or to remain in the workforce longer. Recent stats show that most are choosing the latter option. In 2011, the number of people in the workforce from the ages of 60-64 climbed to 47 per cent in 2011 from the 34 per cent where it sat in 1989; and the number of those working from the ages of 65-69 also rose to 23 per cent in 2011 from an 11 per cent total during the same time frame.
“From an economic standpoint,” says Ms. Mitchell. “It kind of makes you think what’s the next generation going to be like when they get to retirement?”