Shot of an elderly couple working out a budget while sitting on the living room sofaRetiring: It’s a pivotal moment in your life and most likely, you have a variety of plans as to how you’d like to spend it. Whether it’s cross-country travel, backpacking in Europe, living on a cruise ship, or exploring hiking places in the Himalayas, retirement is supposed to be the time when you can enjoy the world after you’ve paid your dues working in it.However, even the best-laid plans can get derailed, but it’s not always because of unforeseeable circumstances, sometimes you can be your own worst enemy.

What’s that supposed to mean?

A spending habit commonly referred to as “empty nest spending” is when people of retirement age spend money that’s (presumably) now free from child-related expenses in a way that’s detrimental to their retirement savings. Of course after spending eighteen years (and often beyond) taking care of a child, as a parent, you’d want the chance to go on long-awaited date nights with your spouse, perhaps go on a shopping spree for yourself for a change, or do something spontaneous that you never could when you had a child to factor into the equation. It’s certainly easy to empathize with the desire to funnel that extra money into things and activities that you’re presumably entitled to purchase and invest in, and of course, you intend to save some of that extra money, right?

Wrong.

Although in theory having that extra disposable income should mean that you’d be able to put away for your retirement, researchers are finding that it just doesn’t happen. The reasons are a little more complex than just a couple nights a week eating dinner at Olive Garden or splurging at Target, however, and here’s why:

College – it’s more expensive than ever

These days, it comes as no surprise that college education more often than not comes with a huge price tag. Although it’s the students themselves that are saddled with student loan debt, it’s often their parents who end up having to help with basic costs of living and have to reach for their wallet when something catastrophic happens.

In a survey conducted byPew Research, findings report that 61% of Americans admitted to helping an adult child financially in the past 12 months. More than half of those same parents (58%) said that the financial assistance was for special circumstances while the remainder admitted to helping with recurring expenses. When you consider that it’s increasingly difficult for college graduates to maintain a basic standard of living at entry-level jobs, it’s easy to understand why parents are more than willing to help out.

Not only are parents helping out, now more than ever before, their adult children are living with them. Adult children living at home, while not a new concept, is on the rise as living with a romantic partner has gone into a free fall – there’s a reason why the old adage “love don’t pay the bills” often rings true!

Unwillingness to downsize

It’s easy to empathize with empty nesters about a reluctance to let go of the home where they watched their children grow up. After all, homes are full of memories and there are always those times when the children and grandchildren visit and need a place to stay, right?

While the emotional impact of choosing to downsize to a condo or a smaller home may be tough, your wallet will thank you for it. A recent study conducted by the American College of Financial Services found that 83% of older adults with a minimum of $100,000 in financial assets and $100,000 in home equity do not want to relocate in retirement, opting instead to stay in their current home for as long as possible.

What can you do? or What are your options?

Letting go is hard to do. It’s understandable that as a parent if your children need help you would continue to support them long after the nest has been emptied. The issue of being able to budget how much you spend on your adult children or the house you want to continue living in is not entirely black or white, but considering how it will affect your retirement may make it easier for you to moderate your spending habits.

One possible option for those over the age of 62 who would like to remain in their home instead of downsizing is a reverse mortgage. If you’ve never heard of a reverse mortgage, you’re not alone – 7 out of 10 participants in another study conducted by the American College of Financial Services didn’t understand what they are either! A reverse mortgage or home equity conversion mortgage (HECM) is a special type of home loan geared towards older homeowners that do not have monthly mortgage payments but still are responsible for property taxes. There are different types of reverse mortgages, and while the caveats will vary among reverse mortgage lenders and this may not be a viable option for you, it’s yet another alternative to consider when planning how to contribute to your retirement fund.

Curtailing spending on adult children is easier said than done, but if you can find a happy medium, you may be able to have the retirement you deserve and always dreamed of. Downsizing may not be a decision you’re ready to make, but exploring it may open up a whole range of possibilities that could make the difference in attaining the retirement you deserve.

Did you find this article helpful? Be sure to SHARE it with your friends and family on social media!

Get more retirement news and tips from AmeriLife

Shot of an elderly couple working out a budget while sitting on the living room sofaRetiring: It’s a pivotal moment in your life and most likely, you have a variety of plans as to how you’d like to spend it. Whether it’s cross-country travel, backpacking in Europe, living on a cruise ship, or exploring hiking places in the Himalayas, retirement is supposed to be the time when you can enjoy the world after you’ve paid your dues working in it.However, even the best-laid plans can get derailed, but it’s not always because of unforeseeable circumstances, sometimes you can be your own worst enemy.

What’s that supposed to mean?

A spending habit commonly referred to as “empty nest spending” is when people of retirement age spend money that’s (presumably) now free from child-related expenses in a way that’s detrimental to their retirement savings. Of course after spending eighteen years (and often beyond) taking care of a child, as a parent, you’d want the chance to go on long-awaited date nights with your spouse, perhaps go on a shopping spree for yourself for a change, or do something spontaneous that you never could when you had a child to factor into the equation. It’s certainly easy to empathize with the desire to funnel that extra money into things and activities that you’re presumably entitled to purchase and invest in, and of course, you intend to save some of that extra money, right?

Wrong.

Although in theory having that extra disposable income should mean that you’d be able to put away for your retirement, researchers are finding that it just doesn’t happen. The reasons are a little more complex than just a couple nights a week eating dinner at Olive Garden or splurging at Target, however, and here’s why:

College – it’s more expensive than ever

These days, it comes as no surprise that college education more often than not comes with a huge price tag. Although it’s the students themselves that are saddled with student loan debt, it’s often their parents who end up having to help with basic costs of living and have to reach for their wallet when something catastrophic happens.

In a survey conducted byPew Research, findings report that 61% of Americans admitted to helping an adult child financially in the past 12 months. More than half of those same parents (58%) said that the financial assistance was for special circumstances while the remainder admitted to helping with recurring expenses. When you consider that it’s increasingly difficult for college graduates to maintain a basic standard of living at entry-level jobs, it’s easy to understand why parents are more than willing to help out.

Not only are parents helping out, now more than ever before, their adult children are living with them. Adult children living at home, while not a new concept, is on the rise as living with a romantic partner has gone into a free fall – there’s a reason why the old adage “love don’t pay the bills” often rings true!

Unwillingness to downsize

It’s easy to empathize with empty nesters about a reluctance to let go of the home where they watched their children grow up. After all, homes are full of memories and there are always those times when the children and grandchildren visit and need a place to stay, right?

While the emotional impact of choosing to downsize to a condo or a smaller home may be tough, your wallet will thank you for it. A recent study conducted by the American College of Financial Services found that 83% of older adults with a minimum of $100,000 in financial assets and $100,000 in home equity do not want to relocate in retirement, opting instead to stay in their current home for as long as possible.

What can you do? or What are your options?

Letting go is hard to do. It’s understandable that as a parent if your children need help you would continue to support them long after the nest has been emptied. The issue of being able to budget how much you spend on your adult children or the house you want to continue living in is not entirely black or white, but considering how it will affect your retirement may make it easier for you to moderate your spending habits.

One possible option for those over the age of 62 who would like to remain in their home instead of downsizing is a reverse mortgage. If you’ve never heard of a reverse mortgage, you’re not alone – 7 out of 10 participants in another study conducted by the American College of Financial Services didn’t understand what they are either! A reverse mortgage or home equity conversion mortgage (HECM) is a special type of home loan geared towards older homeowners that do not have monthly mortgage payments but still are responsible for property taxes. There are different types of reverse mortgages, and while the caveats will vary among reverse mortgage lenders and this may not be a viable option for you, it’s yet another alternative to consider when planning how to contribute to your retirement fund.

Curtailing spending on adult children is easier said than done, but if you can find a happy medium, you may be able to have the retirement you deserve and always dreamed of. Downsizing may not be a decision you’re ready to make, but exploring it may open up a whole range of possibilities that could make the difference in attaining the retirement you deserve.

Did you find this article helpful? Be sure to SHARE it with your friends and family on social media!

Get more retirement news and tips from AmeriLife

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