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By Andrea Coombes, The Wall Street Journal
January 28, 2007

The good news is baby boomers aren't as selfish as the "Me Generation" label sometimes assigned to them might suggest. The bad news is their generosity might force them to work well into their retirement years, according to a new survey of working Americans. About one in five workers 45 years of age and older provide financial support to a parent, according to the survey of about 5,400 adults conducted by Brightwork Partners for Putnam Investments. And a fair portion of boomers are supporting their adult children: Almost one-third of working Americans 45 and older with a grown child over age 25 pay rent or provide housing for that child, the survey found. Meanwhile, 45% of middle-aged workers with grown children provide financial support of about $2,500 a year on average.

"Baby boomers are not selfish" says Beth Segers, managing director of market planning at Putnam Investments in Boston. "Boomers will take care of their elderly parents and... they'll take their kid back too," she says. "The implication is that they will make up the difference by working later themselves to pay for retirement." For instance, 42% of those supporting their parents say they'll work for pay in retirement as a result, while 26% say they'll delay their retirement. Already, the portion of retirees who returned to the job market rose to 35% in this survey from 29% in a similar survey a year earlier.

Returning to work is "a very healthy attitude to stay vibrant and focused and active," Ms. Segers says. But relying on that option to shore up lost retirement savings assumes boomers will be healthy enough to continue working, and will find jobs. That's not always the case, she warns.

Don't Bet on Inheritance
Inheritances won't be there to rescue many of those who find themselves sacrificing retirement savings to support family. "They're not going to inherit a lot from their families. The parents need the money for themselves because they're living longer," Ms. Segers says, noting that 17% of those surveyed say they had received an inheritance and 24% expect to in the future. The median inheritance was $37,700. Only 1% of those surveyed said they received an inheritance greater than $1 million, and 5% inherited between $250,000 and $1 million, Ms. Segers says.

For most people, "inheritance is a false hope," Ms. Segers says.

What to Do?
For those who find themselves with a parent or adult child in need of help, the first step is to assess the situation, says Michael Eisenberg, a personal financial specialist and founder of Eisenberg Financial Advisors in Los Angeles. Revise your budget, accounting for the new expenses, and include your loved one in that conversation, he suggests.

Next, before sacrificing your retirement savings, look for extra cash. Consider all possible options.

"Think outside the box. Don't just be pigeonholed with, 'This is what everybody has told me I should do,'" Mr. Eisenberg says. Options might include seeking help from other relatives, including your other adult children, or borrowing against a whole-life insurance policy. Perhaps your parents can take out a reverse mortgage on their home.

With adult kids, assess whether this is a one-time situation or a constant, Mr. Eisenberg says. "If the children are working but can't make ends meet, maybe the mom and dad should sit down with the kids and say...you're spending too much. Move out of this $3,000 apartment you're in to something that costs $1,500 a month."

That situation might signal it's time your adult child met with a financial planner. The parents "should communicate with their kids and work with their kids for a common goal," says Michael Bischoff, a financial planner with Webb Financial Group in Bloomington, Minn. The goal is "to get them to come in and meet with us to talk about these issues."

Assess what you realistically can offer, Mr. Eisenberg says. "You don't want to see your adult children suffering, but what can you actually do? You're 70 years old and you spent your whole life working. Do you want to [continue working]? Are you physically able to do that?" he adds.

That assessment might lead you to say no. "I have counseled clients to not make any gifts to their adult kids, because they don't have the financial ability to do that," Mr. Eisenberg says. "I'm a parent. I understand what a parent wants to say. But what happens if the parents get sick and need to cover their health expense?"

Planning With Parents
Talk with your parents about their financial affairs as early as possible, so if and when they need help you have a good handle on the situation. Mr. Bischoff says one client was shocked at how much time she spent sorting through her parents' affairs as they moved into an senior living facility.

"She's overwhelmed. Her parents have a lot of accounts all over the place. The parents haven't prepared properly for this, which is fairly common," he adds.

Research the prospect of buying long-term-care insurance for your parents, to offset potential future nursing-home costs, Mr. Bischoff says. Suggest your parents meet with an elder-law attorney now to organize their financial affairs, he says. "Most people go to the attorney too late," Mr. Bischoff says. "Too late is usually once the health-care scenario has started."

Write to Andrea Coombes at andrea.coombes@dowjones.com

Source: The Wall Street Journal Online

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