7-10-26 The Boomerang Generation - When Adult Kids Move Back Home

And now for something completely different. Forget everything you've been told by others before. Get ready for the real deal. The full story. Real talk about money. Markets. Life. Now, it's The Real Investment Show. Presented by RIA Advisors. I guess we're on. I think you missed that cue there, Rich. I sort of did. I was waiting for the right musical cue, and I totally missed it. And it's Financial Fitness Podcast. That happens to be on Fridays, but it's the Financial Fitness Podcast. Welcome. I'm Rich Rosso, CFP, with Jonathan Smarty McCarty. Good morning, Rich. Here. Barely. Yeah. Poor, poor Jonathan. His July 4th escapades. When he walked in here and he said he had bad gas, I thought he ate at the Taco Bell, but it happened to do with literally contaminated gas. Be careful where you fill up, guys. It seems very random, though, because you hear stations where it happens. You've been going to this station for a long time, right? So you always know, like, hey, I'm going to go to the station that I depend on because I know I'm not going to get contaminated gas, and yet it doesn't matter. Yeah, I'm a boring creature of habit. I mean, I do the same thing. I do the same thing. but I always worry before I fill up going, hmm, is this going to be the, is this the day? Is this the day? It was the day for me, yep. And unfortunately on a holiday. Yeah, that made it even more exciting. Even though that lit firecracker you threw in the gas tank, apparently had no impact. No impact at all. Just extra combustion. Well, sorry to hear that. Hey, so the Texas Stock Exchange opened Monday. Nice. As Brent says, yeah, all straight. He says that like Minnie Pearl. And again, I'm not going to explain to Jonathan who many Peril is. I didn't get that reference. So they got trading hours. It's a pre-market session, 8 a.m. to 9.30, then regular market hours, 9.30 to 4. So they're going to do, you know, just to test the exchange viability. But I think it's going to be a big thing. Do you have any thoughts on the taxi? I think it's going to be great. I think it's going to be great. Yeah, I absolutely think it's going to be great. Also, you know, I'm sure you're aware of the prevalence of high-frequency trading. and microwave transmissions going on from New Jersey to New York. And so I think that's going to open up a new direct stock exchange. My question will be the ability to direct those trades. So a lot of brokerages allow you to direct your trades to a specific exchange. There's IEX. There's a number of different ones you can choose from. You've got to build confidence, but you have to remember, there's $275 million in funding that came in for this. BlackRock, Citadel, that, you know, major presence. Look at J.P. Morgan. I think they have more employees in Goldman and more employees in Texas than they do now in New York. Right. So this is going to be a big, you know, listen, you have more financial services workers than in California. That's not that saying much in New York. But New York was the capital. But now that you're starting to democratize it, it's going to be I think it's just going to be interesting to watch. I think it is. It's also, you know, the fact that Texas doesn't have any state tax, obviously might be one of the influences that had them open the exchange here in Texas versus New York, which has horrible state taxes. And getting worse all the time. Yeah. So it just makes sense that, and North Texas is very nice. Nothing against Houston. Well, this is, we're not going to get into that tirade. But I think that'll be great. So we're going to talk about a little bit of a controversial topic today because you have more people, younger people moving back home or not leaving. Yeah. Years ago, this was a big stigma. And I wrote this about in my book in 2012 that this was going to happen because even then when you looked at Pew Research, you had more people still live after the financial crisis living at home than any time since World War II. That trend has only gotten worse. So just to go down memory lane with you was overall consumer prices, when you look at inflation, they're 25 to 26 percent higher than they were before COVID. Yep. Right? So you look at some categories have risen and have not gone back down, right? We understand the supply chain issues, groceries up 30%, food away from home 30%, housing and rent. Actually, there's a great study out by the Federal Reserve Bank of Dallas and I think San Francisco about how illegal immigration has increased the price of housing. But I mean, again, it's not totally conclusive. It's just the white paper and synopsis. but more importantly than that is just the fact that we haven't been able to recover. People want prices to go back to where they were pre-COVID, and unfortunately, that's just not how it works. Although Walmart has something out there about rolling back prices even further, right? I remember that jingle. Remember that? So I think what people want is it's not the rate of change, and the rate of change obviously is getting heated up with the Iran conflict, and we don't want that to happen. But people want to know that, hey, if I paid $6 for a loaf or $5 for a loaf of bread before COVID and now it's $8, I want it to go back. Right. And we just know that unless companies – And if they do go back, that means you have disinflation or a deflationary environment. We don't want that. So it's a really tough time. So when you look at all the stats, you can see how this has become an arrangement that's no longer a stigma. Well, and I think that part of that driving it is the difference between the increase in cost of goods and services and the increase in wages. And so that, you know, from five years ago, wages have not grown 30%. That's right. And so that, of course, is going to start pinching budgets. so there's a story in the Wall Street Journal the national medium home price hovers above $400,000 rents are at record highs in a lot of cities across the U.S. and listen a lot of young people want to live in cities I always argue with when I do a lot of Zillow searches or I know a lot of real estate agents across the country I can buy a house in the United States but it's where I want to live where there are really no people around. Not where younger people want to live. They want to live in a thriving metropolis. And unfortunately you're going to pay more. And I always talk about this story when I was working at 200 Park Avenue building portfolios and working for a company called Dreyfus years ago. So in 1991, I was paying $1,800 a month in rent. in New York City. And then when I moved 30 miles away on Long Island, I had to take the train in, I was still paying $700 a month in 1991, 1992. Still pretty high. So prices have always been this way. But to your point, wages haven't kept up. We have a skilled mismatch, I think, too, of what kind of jobs are available and what people are willing to take. Right. So now you're having younger adults, due to chronic high living costs, moving back home. What I wrote in my book, I didn't have a problem with this. I always think about if my daughter got divorced or she lost her job. Now, this is not for Lance, because at 18, they're out. Like, Lance says, you don't even have it. I think the bags are packed right at high school graduation. Yeah, that's what my dad did for me. Is that what your dad did for you? Absolutely. Yeah. Okay. So, so see, I'm not, so this is where it gets controversial because everybody's got a different view. See, I wouldn't have been able to do that to you, but what do you think? What was your perception then when it happened versus how you feel about it now? And what would you do with your kids? Honestly, you know, when I was 18 and faced with that, I was a little concerned about being able to support myself, but it also forced me to, to be more, more of a go-getter. You know, it forced me to develop that initiative to go and make my own way in life. And I went through a number of different jobs before I decided to go back to school. One of them was work in construction. I've told you in the past, Rich, my dad made me go work with him because he wanted me to know what it was like to work with your back instead of your mind. That's very motivating. And you also realize what it means to be an adult at a younger age. Now, I fortunately, I grew up in an area that wasn't high cost of living, you know, so it was a little easier for me to manage that transition, but it was still absolutely a struggle. But it made me appreciate. It's scary too, right? It is, yeah. But it's also very much confidence building when you are able to at least maintain a certain standard of living. Now, don't get me wrong. I was on furniture that was gifted to me, and I was eating Top Ramen a lot of nights. But as a teenager, not too worried about that. But it definitely pushed me to have a sense of industrialization, wanting to be somebody who can go and make his own way in life. And I think for young adults or young people who are doing this, are leaving, they seem to be cohabitating. Like, in other words, we didn't want roommates. When I got out of college and we wanted our own place, it seems like they want that social aspect where they rent out rooms and they live together. And it's almost like a little community. It's a community, yeah. And so that's how my daughter did it when she moved out, and she moved out about the same age. And she comes back to home and goes back, but she doesn't stay. She's been financially independent for a long time. But I always wonder if there's some sort of crisis or something that happens. But also, I'm going to get into the article in some steps down the road here, but we have a long-term care crisis in this country. Yes, we do. And you think about it from a parent's perspective. and I don't want my kids to take care of me, but there are a lot of parents that go, gosh, I really don't want to leave my home. I want to age in place. If my child wants to come back, as long as there are a set series of responsibilities, then they're also going to be here for me when I get older. Hopefully. Almost like, well, hopefully, like custodial care. And some of them want to because they don't want to leave. But I remember if you were living at home as a 20-something when I got out of school, that was a failure. Yeah. Like, that wasn't a way to get chicks. I mean, even when I got out of school. Like, hey, I'm living at home with mom. Yeah. She makes a great lasagna. So, but, you know. Did they make a movie about that? Did they? Failure to launch. Failure to launch. It's a great movie. Yeah. Yep. All right, all right. In my case, it was Psycho. But that's a longer thing. So living at home now, it's got a different, it's no longer a failure to launch like a stigma like, ew, ew, ew, you live at home. It's almost now a sign of financial prudence, and for some, it's permanent. Yeah, I mean, you know, the article makes that argument. I kind of have mixed feelings on that. It's more out of necessity that a lot of these individuals are moving back home because of the high cost of living on your own. It is. So, you know, there is a little bit of narrative in that article, which I do recognize has some merit. Of course, they did ask people in this situation, but I can see it from an adult's perspective. Like, it really would be nice to have my daughter as the dog sitter while I go out of town. Like, I like that idea. But last year, 49% of adults under age 30 said they live with a parent up 12 percentage points from 2019. And that's the Federal Reserve Survey of Household Economics. Yes. Staggering. Nearly a third of those adults are 25 or older. I talk to families that have not only the kids, but the grandkids. Everybody's living together. Or they're living really close by in houses that the parents sort of purchased. Yeah. So it's an odd time. But now it's sort of accepted. So I guess in the article was, you know, the families have dinner together every night, sort of like that. They go golfing. They go walking together. But I'm bringing this question to you again. So would there be a situation where, say, for example, one of your kids said, I need to come home. Always. Would there be a situation? Always. Yeah, see, I'm like that too. Like if, you know, I'm not going to be Lance and put the, you know, who are you? I changed the locks already. No, and, you know, to what I said earlier, yes, my dad, you know, told me to leave after I graduated high school, but I always had the option of coming back if I was in a situation where I needed somewhere to stay. But you know, ironically, I think that makes you more independent. It does. Because knowing that I didn't do a Lance. Sorry, Lance. I love you. I just don't understand you. He really does this. And again, he's trying to, he's got a good heart with this. He's trying to make his kid Brazilian, right? Like you, what happened with your. Yeah. Should have named him soon. I think what makes it, what makes you feel better is that, look, and we tell our daughter this. I tell my daughter, listen, if anything is ever wrong and you need to come home, you always have a home. I'm not going to kick you out. Right. Well, even when I relocated here from California, I mean, I stayed with my parents for a few months while I figured out where I was going to work, where I wanted to live. And so that, you know, transitional is one thing. But being forced to live with your family because of the inability to afford living on your own due to differences in housing costs versus wages, I think, is a different narrative. And to your point, Rich, it's more socially acceptable now, I think, because more and more people are in this situation. It's easy to stigmatize somebody when they're 15 percent of the population. It's much harder to do when you're 50 percent of the population. Yes, absolutely. Now, obviously, we're even seeing home builders get on this trend. Oh, yeah. Right. The tiny homes. I watch a video with a young woman. she lives in, she took the family's garage and she paid for it, but she turned it into a place to live. Separate entry, you know, separate walkways and all that. But she's, it's amazing what she turned it into. Because I wrote in my book in 2012 that tiny homes would be a big thing. Yeah. I thought they actually would be bigger now than they are. But they're definitely trending in the direction I wrote about in the book. They certainly are. And Gen Z a sign of affluence or a sign of success even for when you graduated was you had the big house Because we grew up in I think I grew up in 700 square feet maybe right And every house, even like if you went on to Long Island to a suburban home, 12 to 1,500 square feet. Pretty standard. It's pretty standard, right? I grew up in 1,500 square feet. Right? That was, you had one bathroom, generally speaking, right? That's how we all grew up. And we seemed fine. We seemed like we grew up okay. for that. You know, and I also, I understand the basics of cost of living, but do you think with all the subscriptions and all this stuff, like we used to have TV for free, like growing up, but go ahead and share some. Yeah, I mean, I'm sure that's part of it. And to your point, Rich, yeah, there is a shift in builders. You know, multi-generational homes are becoming more common, right? Separating living spaces. ADUs are becoming more common. Having something in the backyard. You know, the in-law quarters, right? That's a term that wasn't even a term when I was growing up. So, yeah, I mean, I'm sure there is an aspect of higher cost for things and subscriptions, but I don't think that it's, you know, avocado toast that is the reason why, you know, younger adults are living at home with their parents. I really don't. And I know that that's a popular narrative that gets put out there. But as somebody who lived it myself. Kicking in the groan. Yeah. Or have seen it with, you know, younger friends that I have and the struggles that they go through, So I think it's a confluence of issues that are coming together and making it more difficult to be independent and on your own at a young age. But we want more luxuries early on compared to how we grew up. Yeah, I'd say that's fair. I couldn't get the G.I. Joe with the fuzzy hair. I had to get the one with the plastic hair because my parents wouldn't get me the Kung Fu Grip one. I really was pissed off. I'm just saying is there's a certain standard of living we want right out of school. Yes, and that's a key point. That we can't replicate. Lifestyle creep is definitely coming because people are leaving their parents' house who are established career adults, and they have all of these luxuries at home. And when they move out, that mindset of this is what I need to have to have a comfortable home. When I first moved out, I sat on lawn furniture and a free couch that was given to me, and who knows what came with that couch. But there's a difference in, I think, wanting to maintain that standard of living. So lifestyle creep is certainly an aspect that's impacting it. I think the lesson is everybody's situation is different as to why this is done. Right? If you have close to 50% of young adults still living at home or coming back home, to your point, I do think it is more of the affordability issue. And something broke after COVID. Something was broken. And we can't fix it. And we can't go back. when you think about how terrible we handle that situation. We're still dealing with the ramifications. Then you have the current administration throwing fuel on the fire with it. But people, when you look at even the Fed, all they care about is rate of change, not the watermark of where prices are today. So home builders, I think, are trying to adjust, right? Smaller homes. Maybe you have to go back to that. more people living together. It's just, it's a cobbled together kind of thing. And I agree with you there. But so I do think though, this is practical and we plan for this to your point with clients who say, listen, I'm, my parents are going to live with us. And we bought, we're going to build out a mother-in-law suite or casita. You go, you know, as I look at home builders, right? And it's sort of standard that you probably are going to build a separate unit for somebody, visitors or whatever, smaller. And there are some parents I talk to that go around it a little bit, but they sort of like having their kids at home. Well, to your point, it's convenient to have extra hands, right, to help. But that's the thing. I should never watch Dr. Phil snippets or read. But it's always the guys that are like 45 to 50 years old that are still living in their mother's, in their old bedroom at home. And it still looks the same as it did in high school. And the guy still dresses the same. And his mother is like 75 and still has to do everything. He does nothing. He doesn't. And he's got kids, and the kids live there. And to watch this, I was like, this is an extreme. But I'm sort of jealous of that guy. Does he really have it figured out, Rich? He does. He sits there playing video games all day. Yeah. And Mom is, Mom, where's lunch? This guy's 48. I'm reminded of Wedding Crashers, you know? Like, Mom, meatloaf. Where's my meatloaf? You know, so we don't want that. But there are examples of that that are very entertaining to watch because the siblings are all ticked off. Oh, yeah. Like he should be taking care of mom, at least if he's there. Yeah. You know, so I just see more stories like that that sort of break me. but there is sort of a comfort maybe in today's environment, especially when you have a daughter that, that she lives close by, even if she's not helping you with anything that she is close by. Maybe some adult parents like that. The key is as advisors, we have to help people look at it pragmatically and economically from a household cashflow perspective. Right? So that, Nobody is going to judge you on your reasons. It's more of, okay, how do we make this work long term? And the one thing I always say before we go into any steps is that child must contribute. Yes, there are costs associated. There are certain costs. And the article you read, you can see that most of them have duties or chores that they do. just fair. Yeah. Right. I mean, even growing up, I had chores, you know, my parents were very open. They had children for cheap child labor. Unless you're that guy you admire who's 48 years ago going, ma, where's lunch? And he's playing, you know, whatever. Yeah. Wizards and warlocks or whatever the hell he's playing. But I, and he's got two kids. Imagine I was thinking about this, not to go back to that guy, but I was like, how do your kids view you? Like your young kids must like be repulsed. Like I would be. Yeah. Like my mother could never hold a job. My mother was an alcoholic and drug addict, and she was on welfare. We were all on welfare. And I had to use food stamps, which was, to go to the store with food stamps was absolutely the worst. Especially in the 70s. Yeah, I can only imagine. They were so big, too. I'm like. Comically large. Yeah. And you felt like when you pull that food stamp out, you, as a kid, like 10 years old, I felt terrible. And the worst part was you were able to buy anything with it. And when my mother would say, hey, can you pick up a box of Kotex? I was like, oh, my God. You know, I'm 10 years old, and I feel like I want to die. But you bring up a good point. We need the price of Kotex on cashier three. Cashier three, young boy with feminine pads needs a price check. Oh, my God. It was terrible. And it's imprinting on those kids, this guy living at his mom's house. That's my point, isn't it? This is acceptable. So is that what they're going to end up doing when they become mature? Right. Well, I'd recommend they move to New York because I hear things are getting very nice there. Yeah, you can get everything from New York. I've heard that. Yes. But I was imprinted the other way. I got fiercely independent because I was so embarrassed. I became fiercely independent. I started a paper route at 11. I had the biggest paper route in Brooklyn, New York. I had almost every apartment building, right? I was so repulsed by this help and so forth. And I do think there are a lot of people who need it. But for me, it was like you said, like when you left the house at 18, I had that epiphany a little younger because of my situation. But I do understand. So as planners, we have to look at this from how does this work practically for your kids? Or not that you're going to have your in-laws pay rent, but there's additional costs to build, additional costs of other things. I look at that for Amy's mom, who I love very much, that there's going to be a point she's not going to be able to live by herself, but she wants to be independent, right? So we have to build a separate place for her, which makes sense. So let's talk about the process. Like you said first, you define the purpose and the timeline, right? You got to see if someone's moving back, why are they moving back? Right. You want to put money aside. I had one client that son moved in after college but had a job. But he says, Mom, I really would like to return here because I want to build up cash. I want to build up savings. So I said, okay, every month you have a meeting and he shows you. How much savings. How much savings. he's putting away. And he did that because it was really a true intention by him. So I can even see that, like I'm saving for a home, I'm paying off student loans, there's a divorce or job loss. One question we ask even when we're planning is, well, how long? Timeline. And you got to be honest about it. It's not like, well, you know, a couple of months, two years, six, seven, ten indefinitely. You know, is there a time frame that we work within so that we could put it into your financial plan and see how much additional cash flow is going to be required to take care of this? Yeah, we talk about this a lot with clients. You know, of course, as a parent, you want to be able to help your child. But, you know, when you have roughly 40 percent of young adults still receiving some type of assistance from their parents, and I don't know where the overlap is with people still living at home. But that study, to your point, is even children who are living apart, there is still some form of aid that Gen Z and baby boomer parents are providing, whether it's cell phone bill, insurance. Yes. That goes on almost indefinitely. Yeah. And job times can jeopardize retirement, right? And we have clients that are in that situation. And, you know, it's a difficult conversation, but at the end of the day, you have to secure your own retirement first before compromising the integrity of your current financial plan to help your children who may be struggling. And, of course, that's hard to see your children struggle. But at the end of the day, you're going to put yourself in a situation where you then may be dependent upon those children, and they may not be able to provide that support. One of the hardest or most difficult things for me as a planner is having that conversation with a mom or dad saying, you are giving too much to your child. what's going on over here because I don't want to interfere too much. And I know the kids. But I also know that mom, generally mom, is making the decision. You are jeopardizing your own situation. Let's put a limit on this. Let's put a dollar amount on this and frequency and find out the why behind what's going on that this person can't hold a job for long or everybody's out to get them or whatever it is. It's everybody else. It's definitely not me. You've been on the same kind of job five times, yet it's all them. I said, Mom, do you ever think? Well, and we have those conversations. And to your point, Rich, it usually is a point of contention within married couples. One individual wants to not support their children as much, and the other one wants to. So it is usually the mother that's being the more nurturing side, but I've also seen it the other way. And so, yeah, it's a delicate situation to wade into because you don't want to come in and see like you're taking sides because it's an explosive issue already. I'm looking into the McCarty's future, and I see Mr. McCarty getting kicked out, but the kid's staying. Yeah, and that's pretty much probably how it's going to go. I'm just laying it out. My wife definitely falls into that category of she will always be there to help her children. She will. Without question. Yeah, I love you, baby. She'll be that mom and that grandma. Oh, yeah. They'll be so happy to see her. Yes, big time. Yeah. Grandparents make a very huge impression on kids. More than my grandparents were really sort of good examples versus my parents being horrible examples. But if I didn't have them, I probably would have grown up a lot different. Yeah. So that does make a difference. So then once you say, okay, here's the time frame. And I also tell this as we go through these steps, I tell mom or dad, put this in writing. Have them sign it like a document. Right. Come here. Sherry will notarize it. Yeah. Or Natalie. Financial expectations. Here are bills. Are you going to pay portions of rent, utilities, groceries, all our internet? What are you doing? Right? Obviously, you're not going to charge your kid top rent, but just something. Right. Some offset expenses. What's common as well for some of these parents who do this, who don't actually need the funds, charging your child a small amount of rent, even if it's well below market rent, and then putting that money aside for them. You don't have to tell them this. In fact, I would encourage clients not to tell their kids this because then they're going to start to assume that they're going to have that money to spend. There's a prevalence in our nation to spend tomorrow's money. There's a saying. I have a friend of mine who's Chinese, and in China there's an expression that the Chinese spend yesterday's money, and Americans spend tomorrow's money. And I think that's a very accurate description. Actually, I think that's not only in emerging markets, but there were a lot of European markets that have the same sentiment. I think there was, was it France? I can't remember where it was, but there was some country that was saying they can't get their people to spend money. Like you said, they're savers. China was never going to have a consumption per capita GDP rate anywhere near where we are And they always wanted to try to make them consumers but they not They savers There are some people that are just bred That culturally ingrained So that a great way where you can encourage your child to have some responsibility, have some accountability, but still be able to help pad their finances to hopefully get them out of your house sooner, if that's your ultimate goal. Then, before we go on to the next one, I do have clients, once we do this, and they set the parameters, and son or daughter goes, they're sort of heartbroken. The house feels quiet again. That empty nest again. When my daughter left for college, I was unexpectedly feeling like there was a hole in my body. Like I didn't expect to feel like this loss when she left. You're a secret softie, Rich. I knew it. You got to really dig. Yeah. Brent's still digging. He's running out of four shovels. But I was like, ooh, what is that? Is it indigestion? You know, but it was the fact that she was leaving. I was loading her up, and I was like, oh, my gosh, this is really. It's happening. And you just feel, like, lonely. Like, think about where you are now. You're, like, going to be in this golden age for your kids, right, where you can see all these new experiences through their eyes, things that you've taken for granted forever. Like my daughter, when I started taking her to the watermelon thump in Luling, just this stupid thing. That's not stupid. Shh. It's hot. It's really cute. I love it. But now she's 20-something years old. She's 26. Dad, we go into the Luling watermelon festival. We went. It was hot as hell. Did you do the watermelon crawl? There's no watermelon crawl, but there was the seed spitting contest. Yeah, you ought to see his daughter spit seeds. Really. I haven't seen her spit seeds, but I've heard a curse a lot. I'm like, what are you doing there, sailor? These little things you live through their eyes and these experiences that you might take for granted become traditions. Like taking your, say, I used to go here and now I'm going to bring. And all of this comes back when they leave. You remember them. I always remember my daughter smaller, not as an adult. it's remember when your mom or dad would say well my mom would you know she was usually passed out so you know well who are you uh but for the most part you think about your children when they're little even when they're adults with their own kids really yeah you'll see this and my parents and my dad would tell me this my grandparents my grandparents would tell me that and i'm like god that sounds like you're you know you're all crazy explains why my mom still calls me john john yeah See? Yeah. Because you are still John John. Still little John John. Hide and watch McCarty. Wow. John John. I like that. That's cute. Oh, yeah. Yeah. My daughter's name is Haley, and I called her Halo because there was nothing she could do wrong. I always had that Halo. Daddy's little girl, huh? So I still call her Halo, right? It's funny. So then you want to, this is the one that's important to me. You have children moving back. Establish household ground rules. Yes. They're even more important to me than the money. Overnight guests, none. Smoking, no. Not in my house. Not in my house. Alcohol, no. But cleaning responsibilities, hours where we don't see each other, respecting privacy, right? Like in the article, I think there was one guy or one girl that was saying, you know, it's hard to bring a date home. Yeah. I'll bet it is. That's sure it is. I'm sure it's hard for the parents to go through the activities of making children when their children are in the house. Like, it feels weird. Especially adult children who know what those activities sound like. Yeah. What's that rattling? And, you know, you got to feel strange. Yeah. I just think about it like that would be, there's no way I would even, like, we're all going in flannel shirts and nightgowns. to bed because you know that was one uh big change when uh when my son arrived i no longer have the freedom of walking around my house uh in the buff really yeah it's just weird it's weird to me yeah because now he's like he's still a baby but at the same time like he's getting older so yeah but you know what if i what if i have a girl you know that's that well then you got to be real it's gotta be strange yeah yeah i'm just starting the habit now yeah you could still walk outside naked. No one's going to care. Yeah, no, my neighbors appreciate it. Yeah. You have a big enough yard. I've gone out there pantsless. I'm like, you know what? It's okay. Now there's this long-term care dilemma that we try to address in financial plans. And we're going to have more and more people, unfortunately, that are going to be alone. That's right. That's why I want to create my housing development. I've already talked to Mondami about it. Can't wait for that. Yeah. Bitter ends. That's right. It may be a bitter time for you, but it's not the end. It's just the beginning. But you are seeing a lot of seniors moving into more communal areas. Yeah. But I may not want my child, of course, to change my diaper or feed me. But boy, some of the chores around the house that I just cannot do and I don't want to leave my home. Yeah. Maybe we can come up with some form of caregiving expectations, household maintenance. maybe they can drive you to a medical appointment right so it doesn't have to be the what we think about of activities of daily living it's just making life easier within the home I don't want to leave and it doesn't always require living with your parents you know we talk with clients a lot and they have conversations between siblings of okay well mom and dad are going to start needing more help so who's going to be the one who moves closer to them you know you don't have to live in the same house, but somewhere that's close enough where to your point, you can take them to an appointment. You can help them move a piece of furniture rather than them potentially slipping a disc, trying to do it themselves. My father doesn't ever ask for help. So, you know, he'll be the one out there trying to move furniture in his sixties. I'm like, come on. Some people do not are not comfortable asking for help. It comes from being independent. your wife um so this sometimes is tough for a lot of parents too to think about i don't i don't need my kids to do anything yeah but if your child is living there okay it's i think it's okay yeah i would agree and again it's not that you may need caregiving services but there are other things that they can do. Plus, there are a lot of single, and I have a couple of instances where adult children, single children, have moved in with mom or dad, widow, widower, because they are getting older. They don't need to move home. They have enough money to live wherever they want. They have great jobs, but they are doing this because they love their parents, and they want to spend time with them. So they're thinking, you know what? I'm not actually a caregiver. My life still goes on. And that's what I did when I was about 30. My dad got diagnosed with stomach cancer and I moved back. And because I knew I maybe had one or two years with him left. I had an apartment. I gave it up. I moved back in this crappy basement. You know, I felt like the boy in the basement. I'm in New York basements. I don't smell very good. So, but I had that time with my dad. You can't get that back. And he needed help sometimes walking and all that. And, you know, it was just good to be there with him, knowing I maybe had a year or two left. So I did interrupt my life, but I didn't really, because I just worked, went to work, and went back to his house. Yeah, I mean, I can share that sentiment. You know, that was one of the driving factors of me relocating here to Houston. You know, my grandfather, unfortunately, had a stroke and passed away very unexpectedly. And nobody saw this coming and made me realize, you know, I don't know how much time I'm going to have left with my parents. And so we wanted to be that among the conversation with my siblings, who's going to be the one moving close to mom and dad to help out. And me being the youngest and most responsible, of course, volunteered to take that. That's so that's a situation again that you I think it comes from it. It's nice. You can make that decision from a position of strength. It's not like you need to be home to save money. I feel like I'm grasping for whatever time I've got left with the people I care about. That's right. And are on close by. So the thing is, this is what people do not do, is review insurance. Umbrella liability coverage increased. Do we need to increase homeowners insurance for belongings? Auto insurance updates. Is this person going to be driving my car now? you know, do this, does my child have some personal property that's very valuable, but not going to fall under my pile? You know, it's a conversation that needs to happen depending on how much time and what this person bring, what the son or daughter bring to the table. Yeah. Right. I agree. Yeah. Could be Pokemon cards. Who knows? Yeah. They're very, they're very expensive right now. You think about the stuff in the seventies and the eighties. that you would own, or like Brent in the 30s, that you would own. Blow, blow. I don't know if I'm kidding. But these things now, you go to eBay, and you go, why did I ever throw those things away? Yeah. Or people who are clearing out their deceased parents' old home and auctioning off all these things that they found that turned out to be collector's items. Right. That they were just squirreled away because that's what their parents did. Or the parents kept the toys or whatever the kids played with. Like this one guy had this pristine, I can't remember what it was, but it was a model kit from the 50s. It was still in cellophane. Wow. Like, you know. Rock'em, sock'em robots, you know. I mean, whatever it is. I mean, these things are worth money. Yeah. You don't realize it now. So now I tell my mother, I did get that G.I. Joe with the Kung Fu grip. It's in my office right now, and it's sitting and looking at me. Tax implications, not often, but sometimes it happens. Can you claim it as an adult child as a dependent? There's a whole, there are lots of hurdles you need to go through for that. can an adult child qualify for tax credits or gifts? You know, we have clients that are consistently, whether kids are living at home or not, gifting to their kids. What are the implications of that? So I think that one is the one that comes up more than anything else. Yeah, I think that one of the common ones is around buying a home, right? You know, that's most younger adults that are buying houses or in getting some form of assistance through their parents, if you're gifting that money to your child, that can have tax implications. But one way to get around that is to do a promissory note and then just forgive the interest associated with that gift. And as long as it's under that gift tax exemption amount each year, there's no impact to you. So that's one way you can kind of plan for those passing of funds. Here's a sticky one for you because you brought it up. There's usually, say if there are siblings, There's one who lives closer to mom and dad, provides most of the support because, you know, sister lives in San Bernardino, wherever she can't make it. She would do it if she were here, but her family is there. So one family member or brother or sister stays behind, pretty much sacrifices a lot. and I see this friction a lot, which I'm getting to, that when said parent passes, someone's bitter. Who's getting what? Who's getting what? How much more is one going to get? In other words, Julie stayed here with me, took care of me, not as financially independent, so I'm going to change my will and give more of the money to one over the other. Yes. If you don't have that discussion with your children or it's not set, you really are going to set yourself up for siblings that are not going to get along for a very long time. It can definitely tear families apart. And if you are going to go that route, make sure that you are explicitly stating in your will or estate planning documents why you're doing this. Why? So that it cannot be challenged, right? because there's mental capacity issues, there's elder abuse issues that can be brought in a court of law to challenge a will that may have been changed later in life. And most of the time, that will will be changed later in life because that's when that parent is receiving the support that matters to them. No, that's very true. The other thing people don't think about is, and we have always been big proponents for IRAs, Roth conversions. as you know we've been talking about it for 10 years now all of a sudden we're in the the throes of the Rothification of America so we all want Roth everybody wants Roth I have to tell clients you don't need a Roth I've never thought I'd say that it doesn't work the math doesn't work on the conversion I still want to do it I still want to do it my neighbor's doing it my parents are doing it it's a trend when you have pre-tax and post-tax there's ways to gift properly so i had one situation with this so unfortunately i got in the middle of the siblings talking about perspective right because these brothers says i weren't really crazy about each other to begin with i mean they were pulling each other here and choking each other at five right then we come in my office and at six years old it looked like you know wwe okay they just never got along off the top turnbuckle so now Now that they're in their 20s, right, it's, yeah, I'm telling you, it's, man, some kids just do, brother, I don't know, I'm just glad I'm an only child. Always been fortunate, always happy. Mine, mine, mine, go, go, go, all mine, I don't share. So the discussion was more of the okay the one party who lives with mom couldn take it anymore and just relented just split everything 50-50. That's just, you know, I don't want to deal with the blowback. But son made a lot less money. Daughter and husband made a lot of money. So I said, here's what we're going to do. We're going to equalize the Roth and the pre-tax. We're going to try to get them as equal as possible as we convert. We make your son the beneficiary of this IRA. The pre-tax. And your daughter the beneficiary of, listen, non-spousal inherited IRAs stink, but I had to think of a way of divide, because that's all she had. How do I divide this up where everybody's happy and then look at their respective tax brackets and then beneficiary accordingly? That's right. So that's how we did. if your adult child, and I had a situation like this, maybe you have, is contributing to the household and there's a sibling involved or somebody else, keep track. Well, you're, yeah, you're, oh, my sister's living there, you know, rent free. No, no. Here's what she's contributing to. Yeah. Well, especially if there's going to be a situation of selling that house rather than keeping it in the family. Exactly. You want to keep track of the payments that one sibling may have made towards that mortgage, and that way you can equalize things out when that property is ultimately sold. Yep. So what we try to do is protect everybody's finances with the financial plan. We are looking at the respect of, say, the parents, but also the children moving back in. That's right. How, as planners, can we make this work? and I think when you focus on the numbers and the plan, even for the adult children and the parents, it does take some of the emotion out of it. I think so. It could be a fiery topic, especially with multiple siblings, but what I'm saying is when you focus on the numbers, you're distracted a little bit and you're forgetting more about, oh, my gosh, she needs to come home and all this. What do I do? Because we're trying to help you make it work. Well, and that emotional component can also cloud what your expectations may be. So putting it down on paper and determining this is what the financial impacts are going to be are going to help you think about things differently than just that emotional need to want to help your child. And I think that's a prudent way to approach it as well, because there are going to be things you won't even consider. Even if you sit down and try and think it out, when your child ultimately moves back home, there will be aspects you did not consider. And that will be something that you may want to take into consideration when you're looking at estate planning or when you're looking at the conditions of them living with you. Yes, absolutely. The toughest part is also discussing exit strategies. We already talked about a timeline. But say you're saying, oh, hey, listen, I'm living here and I got a job and I'm going to move out in six months. and then all of a sudden I lose my job. Damn you, AI. I lose my job. Well, what does that mean? We need to readjust the timeline. Maybe now that you can't pay rent, let's talk about chores that you can do. I understand you're going to be looking for another job, but what else can we do? That lawn needs to be mowed. That lawn needs to be mowed. Definitely. Every other day at noon. I'm out there with a ruler checking. I'm checking. What's the grass length? Make sure you're keeping it. He's one of those people, too. I've got a little OCD. Me, too. When it comes to the lawn. I'll stand out there and look at the lawn for like four hours. It never happened until I moved to the suburbs, and now I just have this unknown desire to have a better lawn than my neighbors and the competing dads. I look at the neighbor and I'm like, still greener. Still greener. Mine's still greener. You need a little nitrogen fertilizer there, Paul. What are you doing, lady? Do you mow on a diagonal? I like to try and go with the baseball diamond approach. Really? So you separate the levels. Yes. It gives you a different color. He is really OCD. Yeah. Yeah. I will share a little tidbit. So I grew up with older brothers, right? And as the little brother, your stuff was fair game for your older brothers. Oh, yeah. I mean, just take whatever you do. Oh, yeah. And I have this weird fascination with having nice socks, right? And this is because, as the little brother, my older brothers would steal my socks, and then they would wear them out, and then I would have worn out socks. It got to the point where I actually started marking my name on my socks so I could call out my brothers for doing this. Because, of course, my parents bought us all the same socks. These are all the socks. Or you could have put messages on the bottom, like die. And then when they put their feet up, you could say, you suck. Here's the OCD part. I would put them on a specific part of the socks so that I knew which foot they went on. And this is how I knew I married the right woman. So she bought me socks that have an emblem on one side of the sock so I know which foot they go on. I love this woman to death. Wow, she knows you. She knows me really well. This woman is, this Mrs. is impressive. She's very soxy. Oh, boom, boom. I'll allow that. That was good. It's the little things. It really is the little things. Yeah. You know, overall. But yeah, you get like that with the lawn. So if you're going to mow the lawn because you don't have your job, we're going to do it my way, not your way. Just get that. And don't wear my socks. don't wear my socks um or my depends those are mine not yours the emotional impact which we've talked about right because we talked about the guy from the dr phil show who i admire who sits in his room all day and goes mom where's my sandwich while he's playing his video game at 48 years old. You have to realize you're no longer, you're not in that parenting room. You're not there to service that adult child. Right. Now it's just cohabitation. Like when my daughter stays over and she leaves the dishes in the sink, I'm like, what are we doing? We're doing this. We're doing this. Having that 50-yard stare, Rich, the flashbacks hitting. You have a PhD in mathematics and this is what you do? somewhere two and two is not adding up. It's two dishes, two dishes and a dishwasher. Let's do an algorithm. Get the dishes in the dishwasher. It's crazy. Like I have to pick up after you? No, that's not happening. So you got to avoid slipping back into that parenting role. You are sharing the home and I'm happy to have you, but keep it up. That's right. Right? This is where sometimes a family agreement, something informal can be created. One or two pages you cover. Why are you there? What's your timeline? What are your financial contributions? What are your responsibilities? If you're there to save, I want to sit down with you every month and go through this process. I want to go through this agreement, make sure we're both sticking to it. We can go to dinner and do that. We can have fun with it. But we want to know, right? Progress to the goal. Progress to the goal. Yeah. And if the goal is that you're going to stay, okay, well, we got to work arrangements, right? Because I've had to go through what you probably have is remodeling goals. Yeah. Not for elderly parents, but sometimes for kids. Yeah. And some of those kids will actually contribute some of their money to the remodel, whether it's a garage or a separate tiny home or a shed that they build out. So, man, do you see? There are some places that make these sheds that are, I mean, you could live in them. Thinking of adding a she shed to your house, Rich? Oh, definitely. I'm sure it's going to be a me shed when Amy's pissed at me, which is usually every hour. I'll be out there a lot. So, you're still in my face. Okay. At least you know. and are you okay with this? Yeah. And build out this agreement, especially around guest policies. I'm sorry. Can you leave Saturday night? Mom and dad want to, you know. This is adult time. I have adult time. Yeah. And the kid goes, Ew, ew. I hope I never have to hear that come out of my parents' mouth. I don't know if I can handle that. You can't. You can't. the one thing you don't want to think about is your parent, you know, because sometimes I'll say, gosh, Amy, you know, I said, I love you so much. Your parents made you. She goes, ugh. No, the stork brought me. I really meant that nice. Can we just say, stick with the stork? Your stork did it, right? Just tell them you were hatched. You were hatched on the stork. Or I just dropped off on the doorstep one day and that's the way it happened. With a note. With a note. Take care of this thing for me. So the most important thing is you got to, oh, first of all, before we go, Saturday, July 18th, narrative busters, canned coffee. Narratives are part of who we are. They form arteries in our brain. We have learned narratives since we're little. But marketed narratives really get entrenched and they spread. And we want to make sure you understand that. And a lot of times that goes with emotions and emotions and investing do not go over very well. So we want to go over all this with you. And we actually have grandpa with us, Lance Roberts. So he'll be a little crabby, but we love him for that because he's so lovable when he's crabby. We pinch his cheek and everything. Go to realinvestmentadvice.com and sign up. It's 8 o'clock in the morning. Send in your questions. But you do have to realize, man, headline fodder and narratives can cause you to make some big mistakes. Let's talk about one before we go. SpaceX. The IPO. I got to get in that. You know, Tony Stark. It's beautiful. Papa Elon. Papa Elon. That went very well for me, didn't it? How's that going right now? Yeah. Yeah. You get wrapped up. I heard from people that I got rid of 20 years ago to call me about SpaceX. I didn't call them back. But I'm like, oh, goodness, this person's calling me? I thought I told you to die. But they're calling me about SpaceX. My only regret was not buying puts when they started trading options on this because literally two days later, it just tanked. What's it doing so far this year? I think it's back below 150. Yeah, that's what I saw too. Topped 210 and then just plummeted. Listen, I'm not banging on Elon. I really respect everything he does. Lance put out a great piece about rules. Once you have rules, you veer away from narratives because you're focusing on that. That's what you need to do. So that's one thing I just remember from this whole SpaceX euphoria that no one's really talking about right now. They're talking more, instead of space, they're talking more about the Uranus fudge store in Missouri. So, but there'll be a point to buy, but the key is with this narrative buster's candid coffee is we want you to understand you cannot be seduced by stories and headline fodder. We see that a lot with Social Security's going away. we know USA Today or any other junk that's out there, they put that out there to scare you and get clicks. In a world of clicks and AI, which you never know anymore is the truth, I watch videos and I'm like, I watched a Houston video that said, this is Houston during a storm and it had two storm drains. And all of a sudden water started spurting out, coming out of the, and I'm like, hey, that is like Houston, right? Dirty water is coming out of the sewer. but then all of a sudden I looked and went wait a minute I think a cow just came out of there and a car and the storm drains were round but now they're rectangle okay AI but there's going to be a point where people are going to think that everything is either AI or nothing is AI and you're going to be able to use a lot of AI to create narratives visually that people will fall for or invest in. Because you know criminals are looking at this going, whoa. I can make money on this. I can make lots of money on this. So we want to go through rules and other things that you need to do. So sign up. It's just an hour. July 18th, 8 a.m. Danny Bulldog Ratliff. Lance, get off my lawn, Roberts. And Rosso, annoying Rosso. Because I do annoy myself. So be there for that. And I think that's pretty much... You have any closing thoughts for us? On the note of narrative busting, don't let them sell you the sizzle is what I like to tell clients. Thanks for joining us, guys. Thanks for being here. We'll see you next week. We'll be right back. .