Parents are downsizing and delaying retirement to make sure their kids and their savings are both OK

There’s no question kids take a toll on family finances. But for parents who want to make sure their family life — now and later is solid — they should cut back. A lot.

TD Ameritrade says half of millennial parents and their baby boomer grandparents would downgrade to a simpler lifestyle to make sure their retirement savings would last them longer. About the same amount would put off dining at restaurants and entertainment outings to keep a lock on their long-term plans.

“It’s encouraging to see that both generations of parents recognize there are trade-offs and are willing to make them in order to keep their retirement plan on track,” says TD Ameritrade director of retirement Matthew Sadowsky. “But it can be easier said than done and to put this into practice, parents should take a hard look at what they’re truly comfortable scaling back on, if need be.”

When it comes to what parents won’t do, their children take top priority. Only 12 percent of millennial parents would be willing to spend less on their children, while 20 percent of baby boomer parents considered this a viable money-saving option. Along with that, only 15 percent of millennial parents would consider having fewer children to save on cash in the long run.

But even fewer said they would cut down on helping their older family members. Five percent of millennials and 2 percent of baby boomers admitted they would lessen financial support to their aging parents or grandparents.

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What a parent will do: stay in, buy less, downsize

Their family styles may be different, but millennial and baby boomer parents both agree that living a simpler lifestyle would help them save more money long-term for their children and their retirement (49 percent and 54 percent respectively).

Nearly half of both groups are considering dining out less and spending less money on entertainment, while 39 percent of millennials and 45 percent of grandparents would buy second-hand, like a used car.

As many Americans are facing the stark reality that they don’t have enough money to last them through retirement, roughly a third of both millennial parents and their parents would consider delaying retirement until a later age.

Other money-saving tactics include:

  • Less traveling — one-third of both groups wouldn’t vacation as much
  • Smaller homes — 27 percent of millennial parents and 25 percent of their parents would look to move into smaller homes.

Making these money moves seem to be working for many families, as 60 percent of millennial parents and 52 percent of grandparents have never had to tap into their retirement savings. Unfortunately, a big chunk of both groups has (40 and 48 percent respectively). Many are dipping into those accounts for emergencies, regular household bills, medical expenses, and at times, vacations.

“People with a financial plan are three times as likely to be confident they will reach their retirement goals,” Sadowsky says. “Tapping into retirement accounts early can put your retirement at risk, and for those parents serving as the ‘family bank,’ this could negatively impact the whole family.”

Budgeting & Saving, Credit & Debt, News, Retirement

401k, Baby Boomers, Gen X, homeowners, millennials, parents, save money

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Article last modified on March 21, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: No Parents, You Can’t Have It All - AMP.