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5 Ways Footing the Bill for Adult Children Puts Your Retirement at Risk

When preparing for retirement, socking away as much as possible can fast-track empty nesters to their goals. To calculate a budget, it is typical to consider expenses such as mortgage payments, food, utility bills, and maintenance costs. But more Americans are also covering living expenses for their adult children long after they should. This practice, while well-meaning, brings about a plethora of negative consequences.

1) Investment return on zero is zero

According to a Bankrate survey, half of American parents have cut back on their retirement savings to cover the costs of some of their adult children’s bills. Fifty percent of survey respondents said they have sacrificed or are sacrificing their own retirement savings in order to financially help their adult children. Cell phones, credit card debt, car insurance and health care costs are just a few of the expenses delivering a blow to parents’ retirement savings. Those dollars covering someone else’s living expenses are not compounding interest over years of time as they should be. This alone is a significant toll.

2) It lengthens the daily grind

Most want to retire as early as possible, but being generous to a fault is keeping older Americans in the workforce longer. Even though making up less than a quarter of the nation’s labor force, workers over 55 filled nearly half of new jobs in 2018, according to an AARP study. More cash flow out to unnecessary spending means punching that timeclock for a longer period of time.           

3) It risks your comfort in retirement

Quality of life in retirement also takes a hit since smaller retirement savings means a smaller pool to draw from when planning trips, hobbies, and purchases. Unplanned expenses and medical costs can cause financial hardship to those less prepared. Not saving enough for retirement doesn’t guarantee total disaster, but it could squash some important dreams. It may be the difference between traveling the world during retirement and sitting at home pinching pennies instead.

4) It does more harm than good

While offering kids financial support may be really helpful in the short-term, this type of overparenting takes a toll in the long-term. Solving their problems for them deprives adult offspring the chance to figure it out on their own. Finding a way to overcome life’s obstacles can be highly satisfying. Experts agree by keeping financial responsibilities where they belong gives adult children the ability to learn, the willingness to take initiative, the motivation to succeed, and the gift of trusting in themselves. Having solid parental boundaries can be a real self-esteem builder.

5) It hurts their financial future

Taking care of your own finances teaches your kids financial independence and good money management skills. Learning by example, adult offspring need to be proficient at managing bills and making sacrifices where necessary. The more they are able to autonomously take care of themselves, the more they will reap financial gains well into the future.

The takeaway

Much of the responsibility in planning a comfortable post-work life lies in the hands of each person. Instead of bankrolling their grown kids’ lifestyles, parents would do a much better service to themselves and their adult children by prioritizing their own financial well-being while teaching their kids financial independence.

As an experienced debt relief lawyer, Attorney Joel R. Spivack has helped countless families throughout South Jersey get their financial state in order through bankruptcy and debt relief alternatives to bankruptcy. I will review your specific circumstances and explain your rights and options.  Call me today at 856-488-1200.