30 Apr Baby Boomers: Should You Be Helping Your Kids Financially?
It can be difficult as a parent to not help out your children when they are in need financially. But when is enough, enough? Baby Boomers are risking their retirement by helping their adult children long term.
Due to the fact that unemployment seems to be increasing and minimum wage is nothing to be proud of, parents are doling out cash to cover rent, cell phones bills and much more.
Research suggests that people are spending more these days on their adult children than on themselves. The problem with that is it’s putting strain on the Baby Boomer’s retirement. The more the Baby Boomer puts out for their children, the less they are able to put away for themselves.
Sometimes parents help their children assuming that the situation will be temporary and it lasts for years. Parents are footing the bill for children who are even making a decent living, assuming that buying groceries and clothing regularly is okay.
The shocking part is some Baby Boomers are actually withdrawing from their retirement fund to cover expenses for their adult children.
So what’s a modest handout to your children?
No one is saying that you can never help your children when they are in need, but it should never come at the expense of your retirement. It’s great if you are able to help pay for things in your child’s life. But if you are using your retirement to do so, it can be a big mistake.
What Not To Do:
- Cash out retirement to pay for a wedding or help in the purchase of a home.
- Pay your child’s rent. If you want to help them out temporarily; give them 6 months to get back on their feet and stop paying immediately after that.
- Subsidizing your children’s income when you have extra money instead of maxing out your 401K.
If you are not well off you need to tell your adult children that you don’t have the money to give them. At some point your children need to make it on their own.
Whatever the reason is for your child’s need for extra money, it is hurting baby boomers. Some can’t even begin to think of retirement as their funds will dwindle due to the rate they are spending on their children.
The sad truth is that many parents will help their children even though they are out purchasing Starbucks coffee in the mornings and getting pedicures at night. Parents are desperate to make their children happy while hurting themselves in the long run. Not only could helping your children hurt your retirement but it’s also sending them the wrong message. You are teaching them to ask for money instead of working hard for the lifestyle that they want. A better message would be to teach them how to save instead of burning all the money they earn.
A lesson in tough love is sometimes necessary in these situations.
If you are looking for guidance in your own retirement planning or are stuck in the rut of paying your children’s expenses then contact us and one of our life coaches will help you. They will provide you with the tools to help you gain your financial freedom back and to make sure you stand on solid ground for your retirement.
Take our FREE Coaching Wheel Assessment by going to our website.