When the value of stocks and bonds in your portfolio has declined, tapping the bonds of your family can be a valuable asset—especially in retirement.
Joseph Jastrzebski, a 68-year-old manager at Home Depot , wants to retire soon. When he does, he and his wife, Valerie, plan to move in with extended family.
The Sayreville, N.J. couple already live part-time with their daughter, son-in-law and grandchildren. Once they sell the family home the Jastrzebski's will move-in permanently.
"It will afford us an opportunity to save money and have something left for our children," says Valerie, a 63-year-old secretary. "We are doing it because this is a situation that presented itself that is ideal for everyone."
Valerie's daughter, Sarah, mother of a five-month-old boy and step-mom to two teenagers, is working as an administrative assistant while studying for a master's degree in holistic health studies. She agrees combining their households makes sense.
"A lot of times now with retirement we see someone ends up in a nursing home or other facility like that," Sarah says. "I think staying with your family is the way to go."
As retirement investments have been eroded during this economic crisis, the number of multi-generational family households has been growing—returning to a trend from half a century ago.
Since 1980, there has been a 33 percent increase in Americans living in multi-generational households. Investors may be recouping some of losses than have sunk their 401(k)s and other retirement portfolios over the past two years, but not enough to keep many soon-to-be retirees from worrying.
"What we're seeing here is they don't have confidence in what they think of as the public safety net—a pension plan," says Paul Taylor of the Pew Research Center. "So they are reverting to the age old private safety net, and that's the family.
The Pew Research Center found the number of Americansliving in multi-generational households grew by 2.6 million between 2007 and 2008, the most recent data available. (Read the entire Pew study here.)
For many families, this living arrangement has significant financial benefits. The Jastrzebski's won't have to pay rent or a mortgage when they move in with their daughter's family. They'll also help defray household expenses for daughter Sarah's family and care for their grandchildren.
"We are not paying anything per-se to live here," Valerie says. "But if there is something we see in the house that is needed, we buy it. It is a whole family situation. It is not them and us."