Although all people feel the heat of the COVID-19, the financial fallout seems to be hitting Millennials hard. Many are turning to their parents for a helping hand. Financial planners advise that parents map up a long term rescue plan for their Millenials as opposed to plugging into a short-term strategy. Millennials defined as ages between 24 and 39.
With unemployment soaring, Millenials are hit hard with research showing the rate of unemployment among those between 20 and 24 years rising to 42.1%. Remedial measures to help millennials become financially independent include proper management of debts, increasing savings, and better understating of the job market.
High levels of unemployment and low income among Millenials
Before the outbreak of COVID-19, Millenials were already facing several financial challenges, including more debts, income inequalities than boomers, and low median incomes. Amid this pandemic, millennials are more likely to lose household income and jobs.
Since the outbreak, financial planners are already reporting an upsurge of parents seeking help for their kids. “I’ve already seen clients coming in, worried about their kids,” says CFP Deborah Badillo of Miami. “They’re going to lose the house! What can I do to help them?”
During this period, parents are advised to encourage their children to take full advantage of all available financial help before digging into their pockets to help. Available opportunities include unemployment benefits that have been expanded dramatically under the CARE Act. Weekly payments have been increased, and the bracket of eligible people expanded to include self-employed, gig workers, and those who have had their working hours slashed.
There are also options to help those with debts. For instance, most mortgages currently qualify for forbearance programs that allow homeowners skip loan repayment for up to a year. Lenders and credit card companies have also added and expanded hardship programs.
The coronavirus hardship withdrawals also allow people to tap their IRAs and 401(k)s without penalty if they were financially or physically affected by COVID-19.
Parents should also carefully access their situation before taking in their children. Giving out their savings may undermine their ability to retire.