Personal Finance

Are Your Adult Children Compromising Your Retirement Security?

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by Alli Thomas

Jul 9, 2019

Merrill Lynch and Age Wave conducted a survey in June 2018 that showed 79 percent of parents are financially supporting their young adult children in some way. This support runs the gamut from significant expenses like mortgage or rent payments and wedding to smaller things, such as cell phone bills or groceries.

 

There are some alarming numbers within the survey:

 

  • 50% of parents take money out of their savings to support their adult children
  • 43% of parents reported living “less comfortably” to support their adult children
  • 26% of parents go into debt to support their adult children
  • 19% of parents have delayed their retirement(!) to support their adult children

 

Many people think that being a parent means supporting your children no matter what. But more money for your kids means less money for yourself later. You may even create a future burden for them as they may have to support YOU.

 

Not only that, but some children will never learn to be fiscally responsible if their parents swoop in to rescue them every time they run out of money.

 

When You Should NOT Give Money to Adult Children

 

According to most financial experts, you should avoid (or at least think twice about) giving money to your adult children if:

 

  • You don’t have between three and six months of emergency savings yourself
  • You have outstanding credit card debt
  • You don’t have enough saved for your retirement
  • You’re unemployed, underemployed or at risk of losing your job

 

The most important thing you can do for your kids is to educate them about money! How?

 

  • Help them create a budget
  • Teach them about retirement savings
  • Warn them about depending on credit cards

 

Even if you are in a good position to help your kids, it’s a good idea to put the terms of the support in writing – how much you are willing to give, for how long, and under what conditions. Your children should never consider you to be a bottomless well of generosity.

 

Need help staying disciplined when it comes to financially supporting your children? A good retirement plan can help you determine just how much support you can provide without endangering your financial security. Get started today by requesting a complimentary, no obligation conversation about your financial situation with one of our financial advisors.

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Alli Thomas

Alli Thomas has worked in the financial services industry for nearly 20 years, with a focus on retirement-related investing. She began her career as a FINRA-licensed participant-services call-center associate at Vanguard, and then moved to Principal Financial Group, where she worked closely with employers, assisting with retirement plan set-up and design, selecting appropriate plan investment offerings, and maximizing employee participation through targeted education campaigns and enrollment meetings. Alli has also worked as a qualified 401(k) administrator and registered investment advisor for several small investment firms. She now writes about all things investment- and finance-related, leveraging her extensive experience and passion for retirement planning to help investors make well-informed financial decisions.

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