We are constantly being reminded of the need to prepare for retirement and given various tips, however, there are challenges that arise that you only realise once you are retired or approaching retirement. One such challenge, which is also a blessing, is your children.

Some of us have fiercely independent and even wealthy children so they are not a challenge to our retirement savings, but there is a phenomenon called KIPPERS which stands for Kids in Parents’ Pockets Eroding Retirement Savings. That may sound like a really big mouthful, but I bet you know exactly what that means. Yes, some of our children never leave home.

The studies have shown that a lot of parents really enjoy having their children living at home. The children provide many benefits such as companionship, tech support, chauffeur services, running errands, being on hand if they fall ill to take them to the hospital and help to look after them. With a list like that, you probably figure — who wouldn’t want that? But, unfortunately, as with everything, there are drawbacks.

In extreme cases, having KIPPERS can cause parents to have to delay their retirement indefinitely to accommodate the expenses. Additionally, parents have the struggle of contending with dwindling incomes while simultaneously being unable to lower or even maintain their expenses.

At retirement, some parents choose to downsize their large homes, they want to sell their family home, buy a smaller, more manageab le townhouse or apartment to save on the upkeep on a larger property. However, this is basically impossible to do if you still have children living at home as you have to have space for the KIPPERS. Normally, after downsizing, parents try to invest the surplus funds and live as much as possible on the interest.

As economies around the world struggle to recover from COVID-19, KIPPERS will find it harder and harder to earn enough money to manage living on their own and all the associated expenses as well as repaying any student debt or other loans they may have accumulated. This lengthens the time that it is likely to take for the KIPPERS to live on their own.

I have heard many people say that one of the things they do is to collect rent from their children, then save and invest it and give it back to the children when they are ready to go out on their own. This certainly is good if the parents can afford it. Otherwise, it is a very tricky balancing act to ensure that as a retiree you have enough funds for your future medical needs and living expenses which, unfortunately, only increase over time. Invest carefully so that you can both earn enough income and grow your portfolio enough to accommodate you and your KIPPERS!

Lisa Minto-Powell is the assistant vice-president, Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm