Emptying the Nest

How do you feel about the kids leaving home?

How do you feel about the kids leaving home? A number of our clients reach this turning point when their child, or children, fly the coop and to be honest, we see mixed reactions. There may be wistful responses as the home empties out. But for many others the moment is likely to be marked by the pop of Champagne. Free at last! A new stage of life begins.

The freedom is a product of time and of money. Time is freed up because you‘re not doing their laundry or navigating around the busy lives and demands of young adults in the household. The money impact is also immediate. It is only when adult kids leave home that parents realise just how much of the grocery bill was dedicated to feeding not only the son or daughter, but also their boyfriend/girlfriend or friends. The energy bill takes you back to levels you haven’t seen since the early 1990s. Each week you seem to have more cash and it would be tempting for financial advisers to urge you to devote this jackpot to your own retirement planning. But that’s perhaps too simplistic. In truth, while newly freed-up couples are more likely to take a vacation, boost their retirement savings or renovate their home for the next stage of their life – there is still the question of whether the children’s financial demands still need consideration.

There’s a niggling voice that says: “those kids may need to lean on us at some point.”

A lot of this depends on whether the child or children are moving into a home of their own or are choosing to do what many Kiwi kids do: shoot off overseas in search of opportunities. This is what happened with James, son of Mark Patton, adviser at Stuart Carlyon. James was offered a graduate role in Melbourne and saw this as a real opportunity to broaden his work and life experience. Mark says, “I can relate to my son’s situation. I myself felt the call to experience work offshore. I did the same at various times when I lived and worked in Hawaii, Japan and the UK.” Mark’s son James has the view that with the right skills, young people have a choice of country and need to make the most of the experiences. “Of course, as parents, there are worse things than having an excuse to visit cities like Melbourne and beyond,” says Mark “in fact we planned our first visit to coincide with Fathers’ Day.” But part of the OE package is a likelihood that the son or daughter won’t put down solid roots. One consequence is the way your garage becomes the de facto storage container for your departed children’s stuff – the snowboard boots, the old laptop – but there are also financial implications for both parties. For example: are the kids covered for medical insurance? What about those outstanding student debts? Reports Mark: “The issue James and I were considering was how to join a health insurer early in life, so that you benefit from pre-existing conditions cover, but want the flexibility to move countries for a global career. Southern Cross offers no cover if you’re out of NZ, so the lifelong cover James has had is of no use. I guess some multi-national companies might offer cover, but how do you solve this dilemma independently?” These kinds of issues need discussion. There are decisions to be made about Kiwisaver, and about student loans while overseas, and maybe filing any final tax returns. Without a bit of wise parental oversight, the children – even when they’re old enough to look after themselves – can avoid some financially sticky situations.