If you think you know more people that live with multiple generations under one roof, you’re not mistaken. Despite improvements in the U.S. economy and the lowest unemployment rate in decades, the number of Americans living with more than one generation under one roof was one-in-five as of 20161.
Many of our clients are asking how to navigate the return of an adult child (or children) to the household? Others are asking whether they should move their aging parents in with them or explore an assisted living facility? Here are some key things to keep in mind as you traverse the multigenerational landscape:
Care for Yourself First
There’s a reason they tell you to apply your own oxygen mask before assisting others – you’re no help to your loved ones if you haven’t prioritized your own wellbeing first. Before you can try to decide how (or whether) to assist family members you need to have a plan. You don’t want to get to the end of the month and realize you’ve helped everyone else but forgot to (or can’t) pay the utility bill. Look at your monthly cash flow, decide how much help you can afford to offer, and have open and honest conversations with family about the arrangement on a recurring basis.
Plan for Expenses From Your Children (or Their Children)
For many parents whose children have graduated college or joined the workforce it may seem as if your days of primary financial support are behind you. However, as rising education costs and student loan balances have outpaced wage growth, many recent college graduates and those with lower-wage jobs have struggled to leave the nest.
When the kids come back home to roost, what are both sides expecting the arrangement to look like? Will rent be paid? How will food and utilities be treated? What’s the timeline on this new arrangement? The relationship between parents and children will usually dictate how “business-like” the conversations play out, but we encourage you to have them, nonetheless.
Another piece that is important to discuss is how financially involved you want to be with grandchildren. If your child is having trouble making ends meet, what happens if a grandchild enters the picture? Regardless of whether they’re in your house or not, will you provide additional funds to help out? Even if they’re doing fine financially, will you be helping contribute to a college fund? How do you reflect your educational desires for those grandchildren in your estate plans? This is where having a plan—or developing one with an experienced financial advisor—can make an enormous difference.
Plan for Expenses From Your Parents
Life expectancy has increased significantly in the last several decades, but for many older Americans the quality of life hasn’t matched the quantity. If you have an ageing parent (or two) at home, how are you helping them navigate their retirement years with dignity? Do they have the assets and/or insurance to carry them through their golden years? If their care needs exceed your capacity, will you help provide for home health care providers? Would you need to help fund the transition to an assisted living facility? These are difficult thought experiments, and even more difficult conversations, but having them today can spare a lot of hardship, both fiscal and emotional, down the road.
Remember: Every Family is Different
We know every household dynamic is different; and we don’t encourage our clients to think of their familial housemates solely in financial terms. Outside of the economic aspect there is plenty of research to show multigenerational homes can improve health outcomes2. In fact, many clients have told us they welcome having their adult children or parents with them because it strengthens their relationship and offers more opportunities for quality time.
What we encourage clients to do is to have an open, honest dialogue with the different generations in their home so that expectations and timelines around the arrangement are as clear and mutually beneficial as possible. While we can’t have these conversations for you, we are more than capable of sharing our firm’s wealth of experience to give you the resources and clarity you need to thrive in your multigenerational household.