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6 Ways Supporting Adult Children Can Wreck Retirement Plans


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Around 72% of parents surveyed said they put their children’s interests ahead of their own need to save for retirement, according to “The Financial Journey of Modern Parenting,” a report by Merrill Lynch Wealth Management and Age Wave. But what about when those cute little kids grow up? Will they start paying their own way?

The report found that 79% of parents continue to provide their grown children with some form of financial report. These parents serve as the “family bank” for young adult children, continuing to pay bills for their kids – while spending twice the amount on their grown children that they contribute to their retirement accounts.

You may want to help your adult children get a leg up by giving them enough for a down payment on a house, buying them a new car or extending your college tuition obligations if they go back to school to earn their Ph.D. However, paying your kids’ way well into adulthood could sabotage your retirement plans.

1. Sacrificing retirement savings

Nearly 50% of Americans said they’ve “sacrificed, or are sacrificing” their own retirement savings because they’re helping their adult children financially, according to a survey from personal finance site Bankrate. These parents aren’t just helping out with big expenses such as student loan debt, either.

A Pew Research survey of adults ages 18 to 29 found that 6 in 10 said that their parents gave them money to pay for groceries or bills, with significant portions going toward rent or mortgage payments.

Find out: 6 Ways Downsizing Can Stretch Your Retirement Income

2. Making kids too comfy at home

Around 31% of adults ages 18 to 34 still live with their parents, according to the Merrill Lynch survey. This can keep parents in a caregiving role, focusing on their grown children when they would otherwise be saving and planning for retirement.

Parents might even be “sandwiched” between caregiving obligations for two generations as they also take on caregiver and financial responsibilities for an elderly parent – interfering with their ability to save enough for retirement or causing them to withdraw retirement savings.

Find out: 8 Questions to Ask Before Relocating for Retirement

3. Setting own retirement travel plans aside

If you’ve long dreamed of traveling in retirement, continuing to support your adult children could interfere with those plans. For one thing, you won’t have as much money – or maybe even not enough money – to jet off to all those exotic destinations you planned to visit as part of your retirement lifestyle.

Meanwhile, 44% of parents in the Merrill Lynch survey said they offer either “some financial support” (23%) or “full financial support” to pay for their adult children’s vacations.

Find out: 5 Big Expenses to Prepare for in Retirement

4. Taking money from savings

According to the Merrill Lynch survey, 50% of parents said they would be willing to pull money from a savings account, and 25% are willing to pull money from a retirement account to help support their adult children.

Find out: 6 Pros and Cons of Having a Roommate in Retirement

5. Living less comfortably

Nearly half (43%) of parents said they are willing to live a less comfortable lifestyle in order to support their adult children financially, according to the Merrill Lynch survey. And 26% would even take on debt as a financial sacrifice for their adult children.

Find out: 7 Reasons to Work Part-Time in Retirement

6. Regrets about poor financial boundaries

Many parents realize they are probably spending too much on their adult children and neglecting “severely underfunded” retirement accounts, according to the Merrill Lynch report.

“Nearly half say they wish they had established clearer boundaries with their children about what financial support they are willing to provide, and many say they have nobody to turn to for advice specific to fostering financial independence in adult children,” says the report.

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