Supporting your adult children can ruin your retirement plans

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Children are a tremendous responsibility, financially taxing and incredibly rewarding. And there inevitably comes a point where, as a parent, you need to cut the purse strings, confident you have raised an independent adult who can sustain themselves financially.

I recently had a meeting with husband and wife clients who have two daughters in their late 30s. One daughter, whom I will call “Jane,” is single and lives in another state, and the other, “Joan,” is a single mom who until recently lived with her parents. The parents have consistently, over the course of our relationship, supported their daughters despite this habit having a negative impact on their own financial situation.

Jane, who is 39, has been able to maintain a job and live on her own, but whenever something happens that is out of the norm, she relies on the bank of Mom and Dad to bail her out. Her parents have, for example, helped her pay for car repairs and other expenses that she should have budgeted for as a responsible adult.

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Meanwhile, Joan, 37 years old, and her 9-year-old son lived with her parents. To my amazement, Joan did not pay rent, contribute to the household or even have a job. This all took a sudden turn when her parents decided that they needed to move to Florida to lower their own cost of living.

Their interstate move did not come without an added cost back home: helping Joan get situated on her own. They did not leave for Florida until they’d bought her a car, rented her an apartment, helped her find a job and then physically moved her personal items from their former home.

I was shocked that they had to move all of Joan’s personal items to her new apartment and that she was not taking care of it herself. When I asked, I was told Joan did not have the time to move her own things now that she had to work. At least that’s what she told her parents.

This type of behavior is mind-boggling to me, and I have voiced my concerns to these clients time and time again. Each time I bring up the fact that their daughters need to start being responsible for themselves, I am shut down with this statement: “What are we supposed to do?” My answer is always that “you need to let them fly on their own; by consistently being their backstop, they are learning nothing.” There will come a time when these parents will no longer be around or able to help their children out in this way. Then what?

It’s in situations like this that many of us, as financial advisors, encourage our clients to use us as a scapegoat. To that point, I suggest that the next time their child asks for money, parents respond that “financial matters need to be discussed with our financial advisor.”

Prepare your children early in life to be financially independent. If not, your retirement plan may need to include funding your child’s lifestyle.

Lawrence D. Sprung

president of Mitlin Financial

They can then use this as an excuse not to support their child in this instance, while still maintaining their relationship. While we will become the “bad guy” in instances like this, it’s worth it if we ultimately help our clients say no and encourage the children to become more independent adults.

These type of family interactions make us feel more like psychologists than financial advisors, but I must say it is part of the work. There is certainly a fair amount of psychology when working with families and their assets.

These clients have continued to help their children financially, to their own financial detriment, even though they are now adults who should be caring for themselves. As a parent, you always want the best for your kids but you have to realize that enabling them to this degree is not doing them any favors. It is parents’ responsibility to raise independent children who will be able to take care of themselves both financially and otherwise shortly after finishing their studies.

Tatna Maramygina / EyeEm | EyeEm | Getty Images

There is a big difference between “helping out” a child in need and consistently being the source of funding for the lifestyle they are living.

Here’s the takeaway: Prepare your children early in life to be financially independent. If not, your retirement plans may need to include funding your child’s lifestyle, in addition to funding your own retirement. This strategy will negatively impact your retirement in terms of what you are able to afford.

It may even cause you to delay your retirement for many years, or force you to never retire.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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