Tom Sedoric

What is KIPPERS and why is it becoming an important term to know? 

It’s one of the most astute slang terms I’ve heard in years and is an acronym: Kids Invading Parental Pockets Eroding Retirement Savings – namely adult children who are, or should be, financially independent in their working years, but still are tapping into the parental nest egg. “Boomerangers” is another term that describes those who have returned to live at home after college or after a job loss. It is an issue for countless families because they face the challenge of managing their own finances and planning their own financial future while coping with the added challenges provided by the outstretched hands of their adult children. 

In our practice, we are seeing more of our 60 or 70 year old clients empower financial literacy, but not enable, their 40- and 50-year-old adult children that are often in need financial assistance. It is a welcome paradigm shift. From a financial advisor’s perspective, understanding this evolving social dynamic is crucial because it’s fast becoming an evolving risk factor for our graying population. 

How widespread is the KIPPERS phenomenon? 

Empirical evidence is still lacking on this evolving phenomenon, but, to paraphrase Sherlock Holmes, something serious is afoot. If a year ago people were sneezing, they are now in the hospital and, at the risk of a slight overstatement, if they don’t address the issue, an epidemic may break out. At a recent gathering of some of the best in my profession, a lot of heads nodded when the topic of KIPPERS was introduced.

What is the context?

Context is everything. The tensions that inherently arise from economic insecurity can reveal cracks in social systems; such as the strain between public workers and taxpayers over pension obligations, as well as strains in family relationships. We have seen how the economic downturn drove more people into early retirement and into distribution mode with their savings and investments – now we are seeing a major risk to the long-term planning that many people diligently created.

How is this connected to the Lock Box dilemma? 

Like siblings, they are closely related. The capital savings, or the Lock Box of parents, must be sacrosanct and should not to be used to buy toys for the holidays or, as we see all too frequently, used to pay the debts of their children – or even providing financial support for their adult children who live at home. Debt and occupational challenges in a shrinking job market are very real outliers we must keep our eyes on. We have seen over the past two decades that many of the children of so-called “lock-box” parents are in deep debt and they have looked to their parents to bail them out. The reasons are many – excessive credit card debt, divorce, job losses, or a financial meltdown due to crippling out-of-pocket medical expenses.

The boomerangers are a more recent and growing trend. According to the most recent study by the National Credit Union Administration, nearly 4 million young adults are living at home with their parents.

What are some of the steps that parents can take to help preserve their savings and to help their children? 

It’s a delicate balancing act and one of our jobs is not to get emotionally entangled in a complex family dynamic. Stereotypes don’t apply here because every situation is unique and very fluid. First of all, our clients are good, hardworking people and they are fairly generous. Their first instinct is, of course to help their children who may be in a tight situation through no fault of their own – or through very human but short-sighted financial choices that have reached critical mass. But from an advising perspective, our job is to preserve the nest egg of the parents and not have their investment planning go awry due to an emotional response. This must be handled dispassionately and treated as a risk factor like any other. 

Our role is to coach our clients and to help them ask straightforward questions and illuminate the financial implications of their choices. One of the toughest questions that must be asked is this – will aiding your adult child help them rebuild their financial independence and enhance their self-reliance? Or will it enable them to continue to financially flounder even more? There’s no ignoring the fact that this is becoming a family dilemma. I believe in order to address this dilemma; families must honestly construct a game plan to tackle this question.


This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. The views expressed are those of Tom Sedoric – Partner, Executive Managing Director and Wealth Manager and D. Casey Snyder, CFP® - Partner, Senior Vice President and Wealth Manager and are not necessarily those of Raymond James. 2240369