Being a generous parent is usually a good thing. After all, most of us want to help out our kids as much as we can, especially when they’re first starting out on their own. But this recent article on the Bankrate.com website pointed out a darker side of parental generosity: a significant number of parents are allowing their own generous impulses to put their retirement security in jeopardy.
Helping Your Kids: How Old is Too Old?
“Parents are responsible for taking care of their children,” Bankrate reports, “and that means emotionally, physically — and financially. But how old is too old to be receiving money from mom and dad? A new Bankrate survey on financial independence looked into the average age Americans think individuals should start paying for their own bills, including car payments, cell phone bills and student loans.” The article is based on a survey of more than 2,500 adults commissioned by Bankrate and conducted just a few weeks ago. The first portion of the article answers the question, “At what age do you think a person should start paying for various expenses on their own,” getting less and less help from mom and dad. This part of the article, which we found reasonably interesting, generally concluded that the higher the expense, the more people expect the parents to keep on helping.
“Bankrate asked Americans at what age they thought a person should start paying for their bills. Most of the results dovetailed the traditional mindset that 18 is the golden age of adulthood — except when it came to big-ticket items.” Survey responses ranged from paying one’s own cell phone bill (age 19) to car payments and car insurance (age 20) to housing costs (age 21) to student loans (age 23). Respondents generally agreed that, as kids age into their 20s, they should be footing more and more of their own bills and relying less and less on the folks. Sounds good to us – except that the rest of the survey suggests that’s not what’s happening.
Helping Your Kids but Sacrificing Your Future Security
“The most alarming finding of the survey isn’t that parents are helping their adult children,” says Bankrate — “it’s that the majority of them say that helping is hurting their financial futures. In total, 50 percent of respondents say they have sacrificed or are sacrificing their own retirement savings in order to help their adult children financially.” To corroborate this statement, we found this article from the Motley Fool website that put the problem of parents sacrificing for their adult kids in perspective. “Just because kids have reached adulthood, does not mean they stop being a financial burden on their parents. Nearly three in four parents with adult children say they help their grown kids with their finances,” Motley Fool reports. A large number, 84 percent, have helped their kids with living expenses, and a slightly smaller number (70 percent) have given kids money to pay down debt. “This type of aid walks a fine line between being the right thing for a parent to do and setting children up for future problems,” warns the article.
According to the Bankrate survey, while half of all parents say that helping their adult kids has damaged their own retirement savings, about one respondent in six says they’ve sacrificed “a lot,” suggesting real concern about retirement preparedness. That concern is probably justified. “The retirement crisis in America is an ongoing worry for Americans,” the article states. “As companies have shifted away from offering traditional pension plans to employees, much of the responsibility in planning for financial life after work now relies heavily on individuals. Unfortunately, some are struggling to keep up.” Last month another Bankrate survey found that more 20 percent of working Americans aren’t saving any money at all, mostly due to high debts and reduced income. (That dismal statistic includes savings for retirement as well as for emergencies.) “For a country where many people are already struggling to navigate their financial futures,” Bankrate says, “the data isn’t encouraging.”
Helping Your Kids Grow Up!
According to the Bankrate article, some experts suggest that helping your adult children out by footing their bills often does more harm than good. At the very least, “parents who are sacrificing their financial futures for their adult children should reevaluate their assistance.” While it’s true that parents may feel awkward and intimidated to force their adult kids off the parental gravy train, having the conversation sooner rather than later is essential. As one relationships expert put it, “the longer the conversation is delayed, the more likely it becomes for resentment to start building from both parties, especially the parents. She urges parents to decide what works best for them and then lay out the facts honestly. In any case, you’re not helping your kids by delaying their entry into adulthood, and you’re not doing yourself any favors, either.
Helping Your Kids with A Family Conference and a Solid Retirement Plan
One way to broach this and other delicate topics with family members is through a professionally mediated family conference. Here at AgingOptions, we often host these private conferences in which families can bring issues to the table and come away with a clearer understanding of everyone’s needs and expectations. If you are interested in scheduling a family conference at one of our offices, or in finding out more, please contact us.
What about getting on the right track in planning for your retirement? That’s what we at AgingOptions offer our clients. We treat retirement in a holistic way, combining the critical aspects of solid retirement planning – finances, housing, medical coverage, legal protection and family communications – into one comprehensive plan which we call a LifePlan. With your LifePlan in place, you’ll have the blueprint you need to build the retirement you’ve dreamed of, one that is fruitful and secure. Best of all, you’ll realize your hopes of protecting your assets, avoiding burdening those you love, and escaping the unhappy trap of being forced against your will into institutional care.
Why not take a simple next step and learn more at an AgingOptions LifePlanning Seminar? Join Rajiv Nagaich at one of these highly popular free events. Thousands of people just like you have discovered the power of LifePlanning in this easy and entertaining way. Click here for our Live Events page and select the seminar that’s best for you; then register online to reserve your place. Come learn more about truly comprehensive retirement at an AgingOptions LifePlanning Seminar near you.
(originally reported at www.bankrate.com)