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Stop blaming Gen Y for wrecking your retirement

The latest slur against members of Generation Y is that they're wreckers of their parents' retirement.

The list of Gen Y's sins grows ever larger: Whiny, spoiled, apathetic, with no work ethic. According to the cover of the latest edition of Time magazine, they're the "ME ME ME Generation … lazy, entitled narcissists who still live with their parents."

A modest proposal borrowed from the satirist Jonathan Swift: Stop young adults from being a burden to their parents and country by eating them. We've already shown an appetite for chewing them up. Consider a news release from Toronto-Dominion Bank last week, headlined: "Boomers risk straining finances to support boomerang kids." Young adults are moving back home because the economy has no place for them, but it's the impact on parents that gets the ink.

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Backing TD up in this enterprise was social worker Gary Direnfeld, an expert on family relationships who was described by the bank as advocating tough love "to avoid a cycle of dependency and to maintain healthy family dynamics." Mr. Direnfeld is unimpressed with today's young adults.

"The word that fits for me is entitlement," he said in an interview. "Kids these days aren't used to doing without. Hardship these days is not having the latest smartphone, versus no smartphone."

Mr. Direnfeld said it's reasonable for parents to offer twentysomething children a hand when they legitimately need it. "The concern," he adds, "is in those situations where the hand up is more driven by a sense of entitlement than need."

TD acknowledged issues like high youth unemployment, rising university and college tuition costs and high housing prices, and said it's natural for parents to want to help their kids cope financially. But the bank warns that such support should not compromise a parent's financial stability and retirement savings goals.

A major bank advocates for parents – and the profits generated by their retirement investments. A major magazine writes a major article on millennials that has some good things to say (they're optimistic and resourceful) but flogs the negative. That's typical of the facile way we engage with the problems Gen Y is having in today's world.

Gen Y members are not blameless martyrs to a dysfunctional economy. Some have undoubtedly contributed to Mr. Direnfeld's perception that there are "way too many young people who stay home playing video games on their parents' dime."

But are we really satisfied with this explanation of why people born between the early 1980s and early 2000s are having so much trouble establishing themselves in the workforce? You get a glimpse of what young people are up against in the April unemployment numbers released Friday. National unemployment rate: 7.2 per cent, same as March. Youth unemployment rate: 14.5 per cent, up from 14.2 per cent in March.

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It can't be denied that kids moving home will cost their parents money. But it's not as if parents have been the best stewards of the money they've earned so far. Bankruptcy trustees Hoyes Michalos reported last week that an analysis of 7,000 personal insolvency filings over the past two years found the biggest debts in the 50-59 age group – an average $84,199. Co-founder Doug Hoyes said these people typically ran into problems when their heavy debt loads left them unable to deal with health issues or a marriage breakup.

It's Gen Y that has the reputation as a parental wealth killer, though. A website called Surviving Adult Children Living at Home recommends that parents have their adult kids sign a contract when they move home to cover such matters as who pays and who does what around the house. There's good sense in this for slacker kids, but the broader message here is that Gen Y is a threat to parents.

You don't need to have any sympathy for young adults to demand a higher level of curiosity about what's happening to them. A floundering Gen Y is everyone's problem. A blog called Humble Student of the Markets recently made the argument that even though stock markets have been strong lately, we're in a long-term downward trend caused in part by baby boomers reducing their exposure to stocks (read it online at http://bit.ly/10SARnB).

The blog post foresees a shift starting in 2017, when the boomer generation's kids start buying stocks. But young adults working in fast food, unpaid internships or endless contract positions without benefits may never be able to buy the stocks that boomers are selling. Now there's a risk to the retirement of Gen Y's parents.

TOUGH LOVE RULES
Toronto-Dominion Bank and social worker Gary Direnfeld teamed up to offer these tips to parents to prevent their kids from being a financial drain:

Have honest conversations
Explain what costs your kids will be responsible for if they move home; explain how supporting your kids may hurt your own finances.

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Pay yourself first
Parents of millennials may have just a decade or less to save before retirement, while young adults have several decades.

Plan for generosity
If you're going to help your kids with a house down payment, make sure it fits into your budget.

Teach financial literacy
Helping kids learn about money at a young age can help them become financially independent; for older kids, parents should shift into the role of a financial coach.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).

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About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998.Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More

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