Struggling Family Members Disrupt Retirement Plans

Most of us understand our expenses will be different in retirement from what they are today. On the positive side, we can hope to see a reduction in costs in some areas. We ideally will have paid off the majority of our mortgage and our children's educations and will no longer be putting aside money for retirement. But we may also experience increased expenses in other areas such as health care and insurance. Although not always clear cut, having some idea of what to expect aids our preparation efforts.

There are also unexpected retirement costs that many people face, including caring for family members who need help or children who move back home. Here's how to prepare for this challenging and expensive situation:

Family bank. Although you may have saved and prepared to support your individual retirement, what do you do when family members unexpectedly need help? Over the past few years the economy has been unfriendly to many people. Many individuals find themselves in the unfamiliar territory of needing help just to make ends meet. Don't be surprised if they come knocking on your door. Some 62 percent of people 50 and older gave monetary assistance to someone in the family over the past five years either one time or on an ongoing basis, according to a 2013 Merrill Lynch and Age Wave survey. And it wasn't just a few dollars here and there. The average amount of assistance was $14,900.

Of course, when those we love need help, we want to step up. But for seniors planning to retire who will be living on fixed incomes, such an unexpected expense can push back the target retirement age or otherwise adversely impact carefully laid plans. And if the retiree has lived a frugal life to prepare for retirement while the family member in need was not so inclined, friction and bad feelings may be the unwanted side effect of an intended good deed.

Children returning to the nest. It's a wonderful feeling when the child you loved and cared for all those years finally takes his first steps toward independence and leaves home to begin his life as a self-sustaining adult. I remember how happy and proud I felt when I graduated from college and rented my first apartment. It was not much and you had to make sure your car was locked if parked in the neighborhood, but it was mine and I paid the rent. I was grateful to my folks for all they had done, but it felt wonderful to be on my own and I did everything I could to maintain that freedom.

These days, young adults often find themselves in a situation where they cannot sustain themselves independently. The economy is bad, jobs are few, competition is fierce and school loan balances are monumental. Whatever the reason, many young people find themselves with no option but to return home. In 2012, 21.6 million young adults between ages 18 and 31 lived at home with their parents, according to a recent Pew Research Center report. That is a whopping 36 percent of the nation's young adults.

Not only does moving back home put a strain on the wallet, but it can also cause problems between family members. Parents may feel frustrated having paid for an education that did not lead to a job. Children may feel embarrassed they could not make it on their own and resentful they are forced to ask their parents for additional help.

Despite our best efforts, we cannot always plan for unexpected circumstances. We have no choice but to deal with them as they arrive. As a retiree, these challenges can become even more daunting with limited financial reserves along with potential changes to the retirement lifestyle you had hoped to create for you and your partner.

Dave Bernard is the author of "I Want To Retire! Essential Considerations for the Retiree to Be". Although not yet retired, he focuses on identifying and understanding the essential components of a fulfilling and meaningful retirement. He shares his discoveries and insights on his blog Retirement-Only The Beginning.



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