While those moves seem sensible in an era when young people face a stagnant job market and rising home prices, it’s also putting stress on their Baby Boomer parents, and threatening the parents’ retirement, says a new survey prepared for TD Canada Trust.
The bank calls this the “deja-boom effect.”
“The tradeoff between providing financial support and saving for retirement is placing boomers under a considerable amount of financial stress,” TD said in a statement.
Canadian young adults are living at home with their parents at the highest rate seen in decades. (Chart: Statistics Canada)
One in four Baby Boomers who responded to the survey carried out by Leger said they are financially supporting their adult children or grandchildren, and 62 per cent said the deja-boom effect is preventing them from saving enough for retirement.
That’s not lost on many millennials. About 44 per cent of them said they are aware that their financial situation is putting a strain on their parents.
"Both generations recognize this isn't an ideal situation, which means important conversations need to take place so everyone is on the same financial page," said Rowena Chan, senior VP of TD Wealth Financial Planning.
"Sitting down with someone who understands different family dynamics is a great first step to set defined goals and establish a financial action plan to best serve both generations."
Boomers supporting their children should sit down with the whole family and make a financial plan, TD Canada Trust says. (Photo: GPointStudios via Getty Images)
TD lays out a series of recommendations for how to deal with the strain of the “deja boom effect.”
It suggests parents come up with a joint financial plan along with their kids “so everyone is working toward the same overall objective.”
Additionally, parents and children should set how much each person contributes to household expenses, and the family should set a deadline for when the kids are no longer being financially supported by the parents.
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