Skip to comments.Last Hope in a Weak Economy? Mom and Dad (extended family by necessity)
Posted on 03/22/2008 8:15:13 AM PDT by TigerLikesRooster
Last Hope in a Weak Economy? Mom and Dad
By EMILY FREDRIX,AP Business Writer
AP - Sunday, March 23
MILWAUKEE - After being laid off from her job as an events planner at an upscale resort, Jo Ann Bauer struggled financially. She worked at several lower-paying jobs, relocated to a new city and even declared bankruptcy.
Then in December, she finally accepted her parents' invitation to move into their home _ at age 52. "I'm back living in the bedroom that I grew up in," she said.
Taking shelter with parents isn't uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life _ even in middle age.
Financial planners report receiving many calls from parents seeking advice about taking in their grown children following divorces and layoffs.
Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months.
"This is not like, 'OK, my son just graduated from college and needs to move back in' type of thing," she said. "These are 40- and 50-year-old children of my clients that they're helping out."
Parents "jeopardize their financial freedom by continuing to subsidize their children," said Karin Maloney Stifler, a financial planner in Hudson, Ohio, and a board member of the Financial Planning Association. "We have a hard time saying no as a culture to our children, and they keep asking for more."
Bauer's parents won't take rent money or let her help much with groceries. She's trying to save several hundred dollars a month for a house while working as a meetings coordinator.
Bauer would prefer to live on her own, but without her parents' help would "probably be renting again and trying to stick minimal money in the bank," she said.
Shirley Smith, 80, said she and her husband didn't hesitate when they invited Bauer to return to their home in Eden, Wis. Buying groceries for another person isn't stretching her budget too much, she said.
"I've got three kids and any of them can come home if they want," she said.
But plenty of well-meaning parents must delay retirement or scale back their dreams because they have to help their children, Stifler said.
Some of Erickson's clients are giving as much as $50,000 at a time to their kids, many of whom have overextended themselves with big houses or lavish lifestyles. And the sliding economy might threaten their jobs.
Parents feel guilty if they don't offer help, but she warns them to be careful with their savings.
"I almost have to act like a financial therapist if you will," she said. "'Here is the line I'm drawing for you. That's fine. You can do up to this point, but at this point, now you're starting to erode your own wealth.'"
Anna Maggiore, 27, lost her job as a publicist in Los Angeles about three years ago and moved into her parents' house in Los Alamos, N.M.
She tried to find jobs, but nothing stuck, so she enrolled full-time at the College of Santa Fe to finish her bachelor's degree in business.
She figures her parents spend about $1,000 a month on her, including a car payment, car and health insurance, school and other costs. Her father is a retired nuclear physicist and her mother, a guidance counselor, will retire this spring. Now Maggiore is looking for work so she can supplement their income.
"It's kind of hitting me finally that I need to get out there and find a job," she said. "Even if it's just part-time just to help out however I can."
A new survey by the retiree-advocacy group AARP found that one-fourth of Generation Xers, those 28 to 39 years old, receive financial help from family and friends.
The online survey of nearly 1,800 people ages 19 to 39 also found 57 percent believed they were "financially independent." But in a separate question, 33 percent said they received financial support from family and friends.
Bauer was caught by surprise when her job at a resort in Kohler, Wis., was cut four years ago, one year after she got divorced. The single mother bounced around to several lesser-paying jobs, declared bankruptcy and even moved 60 miles south to Milwaukee.
Her daughter, now 12, moved in with Bauer's ex-husband near her hometown.
Bauer decided to move to be closer to her and in December she found a job with the Experimental Aircraft Association in nearby Oshkosh. She tried to buy a house but needed 5 percent down. She only had 2 percent. She's now saving for a down payment and hopes to have it as early as June.
Bauer said she gets along well with her parents and knows she'll never get to spend so much time with them again. But it hurts her ego to live at home.
"I've had people say to me, 'Oh God, I could never do that,'" she said. "But you take humble steps in order to move forward."
Woe unto me if I, at 52, have not enough common sense than to ‘have to’ move back in with my parents because of financial reasons.
Is this indicative of a weak economy? Or of individuals who have never grasped the importance of personal responsibility?
Well, gee, I’m in my fifties, never made a huge salary, and still own a place to live and have enough money that I could survive without a job.
My parents are 87 and 85, and they have more money in the bank than any of their 5 children, and a home that is paid for. I have one sibling living with them already. That’s the difference between growing up in the Depression years and growing up in the 50s and 60s. It’s our own fault for spending it all as we made it, and not saving. A lot of us Baby Boomers are working like hell now to catch up, and that is one reason why consumer spending is down.
Well, if you ever need a good meetings coordinator, I know where you can get one cheap.
Maybe she could move in a house with about fifteen other people. They could use the bedrooms in shifts. Getting paid under the table at less than minimum wage would help also. Medicine of course would be free courtesy of the local emergency room. Always somebody ready to employ those willing to work for less. Real hard to compete with someone willing to live this way for a job that doesn’t even pay a living wage.
There is no question that a lot of us could have saved more; but a lot of us also had to pay off student loans when we started out, and a lot of us have had much less stable careers than our parents had. I have had 10 jobs in 25 years, with three long stretches of unemployment that ate up my savings and even sent me into debt.
Well, I have never seen illiterates who can’t speak English working as a publicist or meeting coordinator. You have to at least present an educated appearance for such jobs, however little you know.
And most of them pay in the $25-50K range.
another reason is we keep subsidizing welfare recipients. Our taxes are way too high. The government makes us pay for the indigent dead wood in our society.
They take money from my childrens mouth to feed less fortunate.
Didn’t know the government was a non profit like the Salvation army or...
If someone says "a lot of us could have saved more" then I see evidence that someone is taking a degree of personal responsibility and I can applaud that. But I think the media would prefer to push its usual agenda.
I have close friends who thought as you do. They're now 85 years old with their daughter, son in law and two grandchildren living with them. Not because of a bad economy (they moved in during the boom years) but because their daughter refuses to live a lifestyle any lower than what she had become accustomed to before she was married.
It's been four years now, with no sign that they'll ever decide to be out on their own. They don't love them any less, they just want them out.
The most destructive thing you can do for the people you love is that which they can and should do for themselves.
The government isn’t a non-profit,they just like to buy votes on our dime.
What planet have you been on? This kind of thing has been going on since FDR's 1935 Social Security Act.
There's no sense complaining about it, unless you have a realistic strategy to take us back to pre-1930s governance.
If you allow an adult child to move back in,at least make them pay their own way.For crying out loud-it’s never too late to at least attempt to teach some personal responsibility.