Every baby boomer with grown children faces this question: Am I now a friend, or still a parent? The author of Retirement Reboot, Dennis Miller of Anthem, Arizona, who MarketWatch has called a “Retirementor,” has written about the question, and how to answer it. He offers three keys to parenthood.
Frankly, many of us are screwing up our most important job: raising self-sufficient adults. There are signs that baby boomers are dropping the ball everywhere.
- Only 39% of incoming college freshmen graduate within four years.
- 50% of recent US college graduates report accepting financial help from family, although half of these new graduates have full-time jobs, per an ongoing study called Arizona Pathways to Life Success for University Students.
- In the US, 14% of adults ages 24-34 live at home with their parents, according to Gallup.
To make matters more difficult, they are threatening their parents’ long-term financial security. Boomers beware!
I’m a positive guy, though, so let’s look at the key habits of parents who are getting it right without risking their own nest eggs.
Key #1—Expect independence and make it attractive.
When baby boomers were growing up, they were expected to go to college and move out— permanently. Mom and Dad made that crystal clear by about fifth grade. If you want Junior to move out and stay out, make that expectation explicit, and help him set and meet realistic goals for making that happen.
We all know parents who help with rent or car payments for their adult children. In one such case, the young guy confided to me that he and two buddies split the cost of season tickets to the local NHL team. I shook my head in amazement. The longer parents support that kind of behavior, the harder it is to wean kids off the dole.
Key #2—Teach good financial habits early.
When your children earn money from chores or receive monetary gifts, help them put a certain percentage in savings. Talk about the difference between saving to buy something special and saving for college, a rainy-day fund, and long-range wealth accumulation.
Get creative, just as a friend did on long car trips. He and his wife would give each of their three children $5 every morning, but they couldn’t ask Mom and Dad to buy anything at the gas station or souvenir shops. They could spend the $5 on whatever they wanted or save it. By the time the vacation was over, there were three savers in the back seat.
When my oldest daughter was in her early 30s, she had two children and a full-time job. Her youngest has medical challenges, and she and her husband had significant debt.
As she shared the details, I wondered if she was going to ask for a loan. I took a deep breath and said, “Wow! What do you plan to do?”
She enthusiastically outlined their new, five-year financial plan. She wasn’t calling to ask for money; she was asking for advice.
Later, I thought about the disservice I would have done to their marriage if I hadhelped them financially. Every few months she would announce that they’d cut up another credit card, and we would cheer.
Many parents want to be friends with their children. I say, deliver the tough messages. Then, when your children become parents, you can be best friends forever.