Yet another study shows us the ways in which Baby Boomers and those with children are sacrificing their retirement for the sake of paying for college costs for their offspring.
Financial Finesse, one of the country’s top workplace financial-wellness programs, conducted this new survey. They offer unbiased education and research on employee financial trends.
Essentially, they’ve announced a new annual report, called 2012 Generational Research, on the financial issues that different generations in the workforce are confronting.
The firm looked at a variety of distinct age groups and what they were most likely to be financially vulnerable in experiencing.
Financial Finesse examined the behaviors of Millennials, Generation X, late Baby Boomers and early Baby Boomers. In particular, they wanted to look at the strengths, weaknesses, opportunities and threats that each generation is currently facing, as well as their financial education and planning needs.
Since I have three kids that I’m preparing for college, and I’m planning ahead for retirement as well, I found some of the key findings of their report striking.
For starters, the Financial Finesse survey found that early and late Baby Boomers who have minor children are definitely sacrificing their own retirement security and their own financial well‑being because they are overemphasizing college planning and taking care of educational costs for their offspring.
Only 16% of early Baby Boomers and 10% of late Baby Boomers said that they had, for instance, a long term care policy. This is troubling, considering that if you need to go into a nursing home, you can get financially wiped out very quickly.
In fact, according to the 2012 MetLife market survey of long term care costs, the average nursing home will set you back $90,000 a year. That’s a huge threat to your financial security once you’re in retirement, if you should, in fact, need home-care assistance or to be placed in a nursing home.
Another interesting tell‑tale statistic from this Financial Finesse survey was that retirement planning is not being done even by late Baby Boomers who are right on the verge of retirement.
Among this age group, 50% haven’t even run a retirement projection, and only one out of four people who are late Baby Boomers know that they’re on track to retire comfortably.
Now, I can assure you of this: While those same late Baby Boomers don’t have any idea of how much it will cost to retire, they can probably tell you exactly how much the tuition is for their kids’ private or public school. Or they have a really good handle on how much money they shelled out in the past year to make sure that their child could attend college.
As parents, needless to say, all of us want to offer the very best to our children and to make sure that they have a great future and an independent financial life.
At the same time, however, we really do have to pause and think about whether some of what we’re doing — in terms of “sacrificing” for our kids — is actually leaving them more financially exposed and at risk in the future, especially if they wind up having to take care of us because we can’t do it for ourselves in retirement.
Recommended Reading – Tips For Baby Boomers Who Borrow From Their Kids