The Unexpected Dependent: When Retirement Is Not for You Alone

Teresa Boardman, 49, and Jack Boardman, 59, of St. Paul, Minn., had a plan. When Jack turned 65, he would retire from his job in the parts department of a car dealership, and Teresa would continue working for a few more years as a self-employed real estate agent. Now they’re reconsidering those plans: Their daughter Sarah, 27, has moved back home while she pursues her graduate degree.

The Boardmans are not alone in finding themselves connected to an unexpected dependent, changing their financial picture.

Nearly 53 percent of American males and 43 percent of American females between the ages of 18 and 24 were living at home with their parents in 2006, according to the U.S. Census Bureau’s Current Population Survey, the most recent data available. Those figures indicate that a lot of retirement plans could be significantly altered. How can the parents of “boomerang” children best protect their retirement interests?

The key is to sit down with your adult child and make a forecast, says Kris Cobb, associate vice president of investments at Wachovia Securities in Houston. That means identifying how long your son or daughter plans to stay and how much income he or she can contribute to the household.

“Based on that information, take an inventory of your own assets and liabilities and see if you have to re-evaluate your own plans,” Cobb says.   

“Boomerang” children aren’t the only unexpected dependents that boomers find themselves taking in. More than 6 million grandparents have grandchildren living in their households, and more than 2.4 million of those grandparents are fully responsible for the children’s basic needs, according to the U.S. Census Bureau. What’s more, 50 million people are caring for chronically ill or elderly relatives during any given year, according to the National Family Caregivers Association.

Grandchildren and chronically ill or elderly relatives have needs that may require a larger financial commitment over a longer period of time than boomerang children need, which can lead to a bleaker projection for a caregiver’s retirement. And with high living costs, rising credit card debt and a recession potentially on the way, many experts predict that the number of unexpected dependents will only increase.

David Raymond, a Philadelphia-based senior financial consultant with PNC Investments, says that a soon-to-be retiree who takes in an unexpected dependent has three options: Delay retirement, decrease the dollar amount that you hope to amass, or plan to work part time after you retire.

“You need to examine your nest egg and look at the possibilities,” Raymond says. “Sometimes just delaying the date on drawing funds for two to five years can have considerable impact.”   

Caregivers for grandchildren or elderly relatives should also investigate assistance programs for which they may be eligible, Cobb adds. “You never know what you might qualify for,” she says. “Make sure as much money is coming in as possible.”

Sylvia Jackson, 56, of East Orange, N.J., has been the sole caregiver of her 7-year-old great niece, Coriyanna, for almost her whole life. In the past two years, she has taken in another great niece, 8-year-old Kiara, and a 14-year-old granddaughter, Markia. Jackson stepped into this care giving role when the children’s mothers lost custody.

“When I took Coriyanna in, I just couldn’t find any child care for a baby that I could afford,” Jackson says.

Instead, she made the difficult choice to leave her position as a supervisory substance abuse counselor to care for Coriyanna. Now Jackson receives government assistance to help make ends meet.   

Donna Stevenson, 53, and Michael Stevenson, 50, of Louisville, Ky., have been caring for Donna’s mother, Mabel Barnett, 85, since a myriad of health problems left her bedridden five years ago. To provide that care, Donna left her job as a secretary, and the couple sold their home and moved into Mabel’s house. Now Michael supports the family by working as a carpet layer—but the demands of Mabel’s care have required him to reduce his hours to a part-time schedule.

Donna Stevenson says that she and her husband have saved little toward retirement and that they plan for him to continue working as long as he can. She also expects to return to work when her mother passes away. [Mabel Barnett died on March 28, 2008.] “It’s scary,” she says. “But hope for the best is the only thing I know how to do.”

Sylvia Jackson sees her situation in a similar light. She plans to continue relying on government assistance and hopes to re-enter the work force soon. But to do so, she must find a job that can provide as much, if not more, than the assistance she now receives.    

Teresa Boardman says it’s unclear whether she and Jack will stick with their original retirement plan when he turns 65. But when they do decide to retire, they know that they will have to make some changes. “When we reach the point where one or both of us want to retire, we’ll probably just tell our daughter that it’s time to move out,” she says.