Hey there, time traveller!
This article was published 7/5/2013 (1483 days ago), so information in it may no longer be current.
OTTAWA -- Along with reduced pensions, low returns on their savings and high debt, Canada's boomer generation is facing an additional burden as they ease into their retirement years -- their "boomerang kids."
A report from TD Canada Trust suggests boomers are taking on more of the responsibility for their adult children struggling to attain financial self-sufficiency in the post-recession years of high youth unemployment and low wage gains.
The report, based on an online survey by Environics Research, shows a majority of boomers have stepped up to help support their adult children, and as many as one-in-five say they would be prepared to put their own financial security at risk to help out.
The No. 1 way of helping out is providing free room and board, but also contributing to major purchases such as cars or computers, helping pay for rent and groceries and of course, paying off credit card bills.
John Tracy, senior vice-president of TD Canada Trust, said it's a dilemma for boomers.
"We've had a people that lived through a period of great abundance in the '90s and 2000s, then we get to a financial crisis and people have been piling up debt because rates have been so low, but the future growth opportunities aren't what they were," Tracy said.
"And then they see their children come into this weak economy and are really focused on giving their child all the advantages in the world."
But he warns boomers there is a risk of doing too much, particularly if it jeopardizes retirement plans.
Other studies have noted that with more than 60 per cent of Canadians not having a company pension plan to fall back on, many pre-retirees have not saved sufficiently to maintain anything resembling their current lifestyles. Some have chosen to work beyond traditional retirement years to maintain their standard of living.
At the other end of the age spectrum, young Canadians remain the most affected by the 2008-09 recession and the subsequent weak recovery.
At 14.2 per cent, youth unemployment remains more than twice that of other workers. But that does not tell the entire story. The 15-24-year cohort is the only age group that Statistics Canada calculates is still below the employment level that existed before the recession.
TD Bank economist Francis Fong said poor economies always hit the young the hardest and this time is no exception. The repercussions tend to go far beyond just high joblessness numbers, he said.
"Job growth has been completely non-existent for the boomerang kids since the recession," he said. "It's a broader trend of the failure-to-launch issue, it exacerbates the problem of being able to afford their first home, getting married later, having children."
And the longer the young are out of work, the harder it will be for them to catch up. A British study calculates a period of unemployment ranging from seven to 12 months for workers in the 15-24 age group can, on average, cause an 11 per cent wage loss by the age of 33 and 7.6 per cent by the age of 42.
The Environics survey did not indicate for how long boomers extend help to their adult children, but suggests the phenomenon is widespread.
The survey of 2,155 parents with adult children not attending school found 43 per cent of respondents saying they have allowed their children to stay at home rent free; 29 per cent have helped pay for a major purchase such as a car or computer; 23 per cent said they helped with groceries and rent; 20 per cent contributed to credit card payments.
-- The Canadian Press