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HP Guide to Navigating Retirement: Strategies for Handling Boomerang Kids

HP employees need to prioritize retirement savings and set financial boundaries with adult children for their future well-being – that can be a challenge, says Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

Wesley Boudreaux, representing The Retirement Group, a division of Wealth Enhancement Group, tells HP parents to model financial responsibility for their adult children but to not rush into retirement planning to get today's support for tomorrow.

In this article we will discuss:

1. Financial impact of 'boomerang kids' on HP parents.

2. Strategies for parents balancing adult children with retirement planning.

3. How to set financial boundaries and model responsibility in adult children.

HP employees and many households across America have noticed in recent years a growing number of 'boomerang kids' – adults, 18 to 35, who, after a period of independence and higher education, return to their parents' homes. A 2024 study by Thrivent called Boomerang Kids found 46% of parents had watched their adult children return home, up from 46% the year before (Thrivent Boomerang Kids study). With inflation, high housing costs, and rising college debts, this trend strains young adults' financial independence.

Those are big financial implications for HP parents. And 38% of parents struggle to pay back their loans and 37% struggle to save for the long haul – especially retirement (Thrivent Financial Impact Report). That compares with 23% and 16% from the year before, raising a concern. But Thrivent CEO and Executive Vice President Nick Cecere says the financial pressure mounts when parents put their kids first, before their own future planning.

Finance professionals say parents – especially HP – should save for retirement before they help their kids with money – first. But applying that advice is tricky. Here are three practical ways finance pros say parents can cope:

Set Clear Financial Boundaries.

A Thrivent study found that more than half the parents do not set financial goals for their adult children (Thrivent Financial Goals Study). This includes contributing to household bills like rent, groceries, and even private bills like car insurance and mobile phone plans. Karen Altfest, Executive Vice President of Altfest Personal Wealth Management, suggests analyzing costs when an adult child comes home. Formal agreements defining shared financial responsibilities may reduce misunderstandings and help plan for eventual independence.

Encourage Financial Responsibility

Financial accountability is important for adults navigating financial independence. Senior Vice President of the Nationwide Retirement Institute Kristi Rodriguez says adults should create a budget and track their income and expenses. This identifies areas where discretionary spending can be trimmed. Parents may also help their children start a budget, even with a small amount. And big debts like student loans may require structured repayment plans with legal agreements from parents, Rodriguez says.

Prioritize Retirement Planning

Parents need regular evaluation of how financial support impacts retirement plans – even HP parents. Once their kids become independent, certified financial planner Lauren Lindsay of Beacon Financial Planning says parents should reevaluate their finances. Contributions should increase to 401(k) plans and tax recovery programs for those 50 and older. The IRS allows additional contributions for those aged 50 to 63, allowing a maximum annual contribution of USD 11,250 to their 401(k)s adjusted for inflation (IRS Retirement Contribution Guidelines).

These contributions could greatly improve retirement funds and provide some cushioning for losses incurred from helping adult children. Tax professional advice may also reduce the risk of legal trouble as financial support is matched to IRS rules.

Parents wanting to help their kids may be a natural desire, but financial planning has to be considered as well. A structured financial plan and boundaries for returning adult children help parents manage financial pressures while preserving long-term retirement goals. This not only benefits parents financially but also encourages responsibility and independence in adult children in the whole household.

HP employees also should consider the emotional challenges of boomerang children that are often not addressed. While financial burdens are well documented, psychological strain from added home demands and changing dynamics is just as real. Addressing these emotional components is important for retirement health.

It is a bit like parents adjusting sails to sail in changing winds when adult children return home. Setting guidelines and budgets is like a course—keeping retirement plans on track without skidding off course—toward a peaceful future.

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Sources:

1. Parker, Kim. 'Who are the Boomerang Kids?' Pew Research Center , 15 Mar. 2012, https://www.pewresearch.org/social-trends/2012/03/15/who-are-the-boomerang-kids/ .

2. Cecere, Nick. 'Boomerang Kids Putting Finances at Risk for Themselves and Their Parents.' InvestmentNews , 6 May 2024, https://www.investmentnews.com/industry-news/boomerang-kids-putting-finances-at-risk-for-themselves-and-their-parents/253014 .

3. Licht, Lawrence. 'Launching Adult Children Financially: A Parents’ Guide.' Forbes , 13 Feb. 2024, https://www.forbes.com/sites/lawrencelight/2024/02/13/launching-adult-children-financially-a-parents-guide/ .

4. 'Boomerang Children: Understanding, Supporting, and Implications.' SuperMoney , 2024, https://www.supermoney.com/encyclopedia/boomerang-children .

5. 'Boomerang Kids and Your Bottom Line.' Bottom Line Personal , 2022, https://www.bottomlineinc.com/life/family/boomerang-kids-and-your-bottom-line .

How does HP Inc. ensure that the pension plan benefits will remain stable and secure for employees in the future, and what measures are being implemented to mitigate financial volatility associated with these benefits? Employees of HP Inc. should be particularly aware of how the transition of their pension payments to Prudential will affect their financial security and what protections are in place to ensure that these payments are maintained without disruption.

HP Inc. ensures pension plan benefits remain stable and secure by transferring the payment obligations to Prudential, a highly-rated insurance company selected through a careful review by an Independent Fiduciary. This move is aimed at reducing financial volatility associated with HP's pension obligations while maintaining the same benefit amount for retirees. Prudential's established financial stability provides additional security to employees(HP Inc_November 1 2021_…).

What specific details can HP Inc. employees expect to learn in the Welcome Kit from Prudential, and how will these details help them understand their new payment system? HP Inc. pension participants will need to familiarize themselves with the information outlined in the Welcome Kit to make informed decisions regarding their pension benefits going forward.

The Welcome Kit from Prudential will provide HP Inc. employees with instructions to set up an online account, along with details on managing payments, tax withholdings, and other resources. This information will allow employees to familiarize themselves with Prudential’s system and ensure a seamless transition without disruptions(HP Inc_November 1 2021_…).

In what ways does the selection process for Prudential as the insurance provider reflect the commitment of HP Inc. to the well-being of its employees? Understanding the rationale behind this decision will give HP Inc. employees insights into the fiduciary responsibilities and governance processes that protect their retirement benefits.

The selection of Prudential reflects HP Inc.'s commitment to employee well-being, as it involved the Independent Fiduciary conducting an extensive review of insurance providers. Prudential was chosen based on its financial strength and ability to manage pension payments securely, showing HP's focus on protecting retirement benefits(HP Inc_November 1 2021_…).

How will the annuity payments from Prudential differ from the previous pension payments in terms of tax implications and reporting for HP Inc. employees? It is crucial for employees of HP Inc. to comprehend the tax treatment of their new annuity payments to avoid any potential pitfalls in their personal financial planning.

The annuity payments from Prudential will be taxed similarly to the previous pension payments, though employees will receive two separate 1099-R forms for 2021 (one from Fidelity and one from Prudential). For future years, only a single form will be issued. This ensures employees are aware of how to manage tax reporting(HP Inc_November 1 2021_…).

What resources are available to HP Inc. employees seeking assistance regarding their pension benefits, and how can they effectively utilize these resources to address their concerns? Knowing how to access support and guidance will empower HP Inc. employees to manage their retirement benefits proactively.

HP Inc. employees seeking assistance can access live customer support through Fidelity or contact Prudential directly after the transition. Additionally, the Welcome Kit will include important contact information for managing their benefits, making it easy for employees to address concerns(HP Inc_November 1 2021_…).

How can HP Inc. employees verify the financial health and stability of Prudential, and why is this factor important in the context of their pension benefits? Employees must ask how Prudential's financial standing influences their view of long-term pension security and what metrics or ratings they should consider.

HP Inc. employees can verify Prudential’s financial health by reviewing Prudential's annual financial reports, which are publicly available. Prudential’s strong financial ratings were a key factor in its selection, assuring employees of long-term pension security(HP Inc_November 1 2021_…).

What steps should HP Inc. employees take to update their personal information, such as banking details and tax withholding preferences, following the transition to Prudential? Understanding these processes will ensure a smooth continuation of benefits for HP Inc. employees as they adapt to the new system.

Employees do not need to re-submit their personal information to Prudential, as HP will securely transfer all necessary data, including banking and tax withholding preferences. This ensures the continuation of pension payments without the need for employee intervention(HP Inc_November 1 2021_…).

How does HP Inc. plan to address potential changes in the financial landscape that may affect pension benefits, and what role does the insurance contract with Prudential play in this context? HP Inc. employees should be informed about the company's strategic outlook and how it aims to safeguard pension assets against economic uncertainties.

HP Inc. plans to address potential financial changes through its contract with Prudential, which guarantees pension payments will remain the same. Prudential manages these risks as part of its core business, providing added security against economic volatility(HP Inc_November 1 2021_…).

In what circumstances might HP Inc. employees see changes in their net pension payments following the transition to Prudential, despite assurances that payment amounts will remain unchanged? This understanding will help employees manage their expectations regarding future payments and any adjustments they may need to make.

Employees might see changes in their net pension payments due to tax adjustments or changes in withholding instructions, but the gross payment amount will remain unchanged. Any garnishments or other deductions will continue as before, ensuring consistency in payment structure(HP Inc_November 1 2021_…).

How can HP Inc. employees contact the company directly to learn more about the pension transition process, and what channels are available for them to have their questions addressed? Clear communication lines are essential for HP Inc. employees to ensure they receive timely and relevant information regarding their pension situations.

HP Inc. employees can contact the company through the Fidelity support line or directly through Prudential for any questions about the pension transition. The Welcome Kit and other resources will provide contact details, ensuring employees have access to timely support(HP Inc_November 1 2021_…).