August 7, 2023

In an about-face, kids now support parents who didn’t save for retirement

So much for stories about boomerang kids who won’t leave home — it now seems that kids are supporting parents who didn’t save enough for retirement!

Writing in The Globe and Mail, columnist Rob Carrick notes that “the overwhelming reason why adult kids are financially supporting their parents is insufficient retirement savings.”

In a poll conducted via the Carrick on Money newsletter, 52 per cent of those aged 18 and up who provide support for their parents cite a lack of retirement savings as the reason they have to help mom and dad. Ten per cent of those surveyed said their parents had outlived their retirement savings — and therefore needed help from their kids, the newspaper reports.

“A suggestion for anyone in their thirties and older: Have a conversation with your parents about their retirement savings. Ask if they have any. If so, how much and what kind. Though it’s not much talked about, adult kids are clearly playing a backstopping role in this country’s retirement system. Be prepared,” writes Carrick.

Some of the other reasons cited in Carrick’s column as to why adult kids are supporting their parents include illness or disability (nine per cent), debt loads experienced by the parents (4.8 per cent) and divorce (4.3 per cent). The article says other reasons include “cultural expectations, job loss and death of a spouse.”

Interestingly, the survey results indicated that “even people who owned homes and who have pensions require help,” the article reports. Seven in 10 of survey respondents said their parents “currently or previously owned a home,” and one in three said their parents “have a company pension.” But they still needed help, the article explains.

“Take note if you think your house is your retirement plan, or that having a pension means retirement security. Pension payments can be small if you work for an employer for a short period of time. As for houses, they are a financial responsibility as well as an asset. Coping with big repair and maintenance bills can be a handful when you’re retired,” Carrick warns.

Other findings from the survey include the fact that 38.5 per cent of those surveyed help their parents “through periodic cash infusions,” and 29 per cent “make regular cash payments to parents,” the article reports.

Eleven per cent report that mom and dad have had to move in with them, the article adds.

While a large percentage of respondents were helping parents who were in their 90s and above, age 60 seems to be when parents start needing help, Carrick concludes. That help, he notes, can be small — less than $1,000 a year — or large, and over $100,000 annually.

Saving for retirement is a great way to avoid being a burden to your kids. If you haven’t started yet, check out the Saskatchewan Pension Plan. Any Canadian with registered retirement savings plan room can join, and once you are a member, you can contribute any amount up to your RRSP contribution limit, or transfer in any amount from other RRSPs.

And if you are worried about running out of money in retirement, SPP offers retiring members the option of a lifetime annuity, which means you’ll get a cash deposit on the first of the month for the rest of your life.

Check out SPP today!

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