When baby boomers welcome their children back to the nest, it should be done without sacrificing their own financial future.
Forget the empty nest. Many baby boomers are finding themselves nearing retirement with a very full house. In a troubled economy and difficult job market, more and more young adults are turning to their parents for help and housing.
"The AARP calls them the 'boomerang generation,' the ones that leave home and then come back," says Phyllis Hill Slater of the AARP New York Executive Council.
Even if they do not physically return to the nest, National Endowment for Financial Education CEO Ted Beck says they are likely to turn to the "bank of mom and dad" to make ends meet.
"We found six out of 10 adult children are actually receiving some sort of financial support from their parents, and that can range from housing to helping pay for insurance, to some money every month to help make the bills go through," says Beck.
While a majority of the parents surveyed said they give this help willingly, not all of them can afford it. About 26 percent said they are incurring debt in order to help their kids and 7 percent are delaying retirement.
"That's a red flag that concerns us, because we want to make sure that parents are actually financially able to provide the support that they seem to be willing to do," says Beck.
His advice is two-fold. First, parents should take a frank look at their own finances to see what kind of help they realistically can and cannot afford to provide.
Next, parents should have an equally frank conversation with their child about finances, as well as their expectations and limitations.
"Are you expecting to be paid back if you provide some financial support? If somebody is going to move back, then how long are they going to stay? How long does it realistically look for both sides? So they are very clear about it," says Beck. "You want to make rational decisions, not emotional decisions."
Finally, parents should keep stark reality in mind. If they jeopardize their retirement savings to help support their adult children, those children may be forced to support the parents later in life, should the elders' money run out.
"The AARP has a motto. Pay yourself first, take care of yourself first," says Slater. "A 20-year-old will survive. There are no loans for retirement."