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DELAYED RETIREMENT A NEW TREND: CAN GIVING MONEY TO ADULT CHILDREN COMPROMISE YOUR RETIREMENT?

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Delayed retirement a new trend: Introduction

Parents never stop wanting to help their children but there is a growing trend which can compromise the retirement of some seniors. It seems that many adult children are still financially reliant on their parents and treating them like an ATM. This makes delayed retirement a new trend.

Parents are paying for their adult children’s rent, cars, cell phones and even vacations, with money they often have to borrow. “There are quite a lot of our members, indeed, who have taken out loans to help their children and grandchildren because they have a better credit rating,” says CARP Vice President of Advocacy Susan Eng.

Delayed retirement a new trend: Grown children have a message for parents

A report by CIBC demonstrates clearly how helping adult children financially can negatively impact retirement plans.

  • 66% of parents are dipping into their nest eggs to support their adult children
  • 47% of parents said they have had to cut into their personal savings to help their children
  • 44% said they have had to limit travel or spending on themselves
  • 25% of parents are giving their adult children $500 or more each month
  • 71% helped their children by offering free room and board in the family home
  • 47% helped with groceries and household expenses
  • 35% helped with cell phone bills
  • 20% have delayed retirement
  • 14% have delayed selling or downsizing their home

Delayed retirement a new trend: Forget what the retirement savings calculator said!

Unfortunately, it seems that parents supporting adult children is becoming the new normal. But, how far should a parent go to financially support their adult children? Many are delaying retirement. Others are borrowing money and accumulating debt which will certainly compromise their retirement.

This is a problem that can’t be solved with a quick fix. As a first step we strongly recommend budgets for both the parents and the adult children. This may help to get the spending under control.

Delayed retirement a new trend: What can you do if you have too much debt?

For parents that now find themselves getting deeper and deeper in debt our best advice is to contact a professional trustee. The Ira Smith Team can help. We have a cumulative 50+ years of experience dealing with diverse issues and complex files and we deliver the highest quality of professional service. There is a way out of debt and back to financial peace of mind Starting Over, Starting Now. Give us a call today.3bestaward

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Brandon Blog Post

BACK TO SCHOOL: TEACH YOUR KIDS ABOUT MANAGING DEBT

back to school, debt, living paycheque to paycheque, student loan, financial plan, credit score, RRSPs, RESPs, life insurance, budgets, trustee, starting over starting now, how to manage debt, managing debt, personal debt in Canada, dealing with debt, how to get help with debtManaging debt or talking about sex?

It’s commonly believed that all parents dread having the “sex” talk with their kids, but a recent study from BMO shows parents would rather talk to their kids about sex than their financial situation and managing debt. Imagine that! Canadians are stressed about money and probably feel ill-equipped to educate their kids about finances and managing debt.

Personal debt in Canada

According to a new national study conducted by Leger:

  • Canadians struggle with regret over financial decisions
  • Argue over spending
  • Feel pressure to keep up with friends or colleagues
  • Bend the truth to friends and family about their financial situation in order to save face

A Bank of Montreal study reports that:

  • More than 33% of all Canadians are ashamed of the debt that they have
  • Almost 40% say they stress over debt levels multiple times a day

There’s no doubt about it, money and managing debt is the top source of stress in our lives. Why are we so financially stressed? Why are Canadians stressed over debt and have so much trouble managing debt? Here are 10 of the most common reasons:

  1. Expenses are greater than your income
  2. You worry about job security
  3. You’re living paycheque to paycheque
  4. You’re fighting with your spouse/partner about money
  5. You’re paying bills late
  6. You use your home equity like an ATM machine
  7. You’re counting on an inheritance to solve your money problems
  8. You’re late on student loan payments
  9. You’re helping out your parents and your kids
  10. You don’t have a financial plan

Dealing with debt

It’s time to become financially literate and educate your kids, not just about the birds and the bees, but about finances and managing debt. Foresters recently offered 5 tips to get smarter about your finances:

  1. Learn everything you can about your finances, including your mortgage terms, bank interest rates and credit score
  2. Start with the simple things like contributing to RRSPs, setting up RESPs for your kids and protecting your family’s financial future with life insurance
  3. Keep track of every penny you spend for a couple of months and look for ways to cut back and start saving. Even a small commitment to saving will make you feel better about your finances
  4. Look ahead 10, 20 and 30 years. Imagine the life you want and what it will take to make that happen
  5. Talk to your kids regularly about money, involve them in household budgeting, open bank accounts for them and encourage them to save for things they want

How to get help with debt

All of this is great advice to avoid financial problems, but if you are already in serious financial difficulty and don’t know where you will begin on how to manage your debt, you need professional help now. Contact Ira Smith Trustee & Receiver Inc. Don’t ignore your debt issues. Face them head on and with the help of the Ira Smith team you’ll be on your way to conquering debt Starting Over, Starting Now.

 

Call a Trustee Now!