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Are Your Kids Putting Your Retirement at Risk?


If you’re like most boomer parents, you give cash or some kind of financial support to your adult children. And while this is certainly a generous move, it’s also a risky one, especially for those who haven’t yet saved enough for retirement.

Fifty-nine percent of parents financially support their adult children (ages 18 to 39) who aren’t in college, according to a new study by the National Endowment for Financial Education.  Nearly half (48%) help their adult kids with living expenses, 41% with transportation costs, and 29% with spending money.  When asked why they do it, 43% of parents said it was because they were “legitimately concerned” with their child’s financial well-being, and 37% said it was because they didn’t want their children to struggle financially like they once did.

But giving money to your adult children can have serious financial ramifications for your retirement, says Pat Seaman, a spokesperson for the NEFE. “You might not be able to save as much as you need to,” she says.  In fact, 7% of parents had to delay retirement as a result of their financial support of the kids, and more than one in 10 had to delay a major life event like buying a new home. What’s more, 26% of parents have had to take on more debt because of it, the study found. That too, can impact your retirement, as paying down debt can impact how much money you’re able to save and eat into a relatively fixed nest egg once you retire.

As any parent knows, it can be tough to know when to say when to the kids. As a general rule, “take care of your own retirement needs before helping the kids,” Seaman says. That often means saying “no” except for in dire circumstances and letting the child fend for himself.  But it doesn’t always: “Ask yourself if you can help the kids in another way.  If they need a place to live, let them stay with you for a few months rather than paying for their rent,” she says.

You should also evaluate the root cause of your child’s demand for money, she says. “It’s important to ask yourself whether it’s a short-term crisis or a chronic condition,” Seaman says.  If it’s something like substance abuse or unhealthy spending values, you need to have your child “open up her finances for you so you can go through them together.”  This way, you can help prevent future financial drains. For more tips on how you can deal with the financial needs of an adult child, click here.


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    • Back in the 70’s the interest rates were about 15%, admtited property prices were much lower, however the average wage was for a tradesman was about a36k. In the past 50 years, only a fool buying at the wrong price has lost money on property, they have only themselves to blame, usualy those that bought with a loan and the sole intention of making a profit.

    • Thank you for this interesting article. I have book marked this site because I really hope you write more articles soon, I plan to share this.

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    • One or two to remmbeer, that is.

    • It’s not the rich here, it’s the middle class and upper middle class that have raised children to expect to have a car, big house/apt, nice meals right from age 22 onward. So they pay for everything their child does, buys, eats, goes. And then what? They get old and forgetful and think this coddled adult can take care them? when s/he has been co-dependent on them for decades!?

      Sadly the friends we see doing this rationalize it: “We like that our 30 yo son is around so much. and his new girlfriend too!” Yeah, around getting presents, field trips, car rides and free meals from them each weekend. I can only hope they’ve saved and protected their retirement.

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.