55% of Parents Help Adult Kids Financially. But Will Doing So Compromise Your Retirement?

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It’s nice to want to help out your adult kids with financial support. But read on to see why that might backfire on you. 

Being a parent doesn’t end when your children grow up and move out of the house. Granted, at that point, you may not need to look out for them the same way you did when they were toddlers and you were worried about them getting into the cutlery drawer or touching a hot oven.

But the concern parents have for their kids tends to remain intact throughout their lives. And so even if your kids are full-fledged adults who fled the nest years ago, you may be inclined to do what you can to support them financially, whether by helping them pay their mortgage or by handing out money when you can.

If you’re in the habit of providing financial support to your grown kids, you’re not alone. In a recent survey by Retirement Investments, 55% of respondents say they still help their adult children financially. But whether that’s the right move depends on your financial situation.

You don’t want to put your retirement at risk

If you’re doing very well financially, are maxing out your IRA or 401(k) each year, and have plenty of money saved for retirement, then you may be just fine to write your grown kids a $200 check every month to help give them some breathing room. After all, you may be at a point in your career where you’re enjoying higher earnings and fewer expenses. So if you can easily afford to share the wealth, why not do so?

The problem, however, is that some parents help support their grown kids financially at the expense of their retirements. So if you’re in a position where you’re not happy with the nest egg you’ve built, then you absolutely should not be financially supporting your grown children when you need to play catch up on retirement savings.

Imagine you give your children $200 a month to help with their bills instead of putting that cash into your own IRA or 401(k). Do that for many years, and you might end up with a serious financial shortfall on your hands once your career wraps up and your paycheck goes away for good.

Other ways to help your adult children

It’s natural to want to make life as easy on your kids as possible. And one way to do that may be to provide financial support. But if money is tight or if you need all of your money to save for retirement, then you should aim to offer your kids help in ways that don’t involve you writing them a monthly check.

One option, for example, is to try to help out with childcare if your schedule allows for that. That could help your kids reduce their costs. Another option may be to allow a grown child of yours to move back home for a period of time, especially if they’re single and won’t take up that much space. This way, they can boost their own savings, and you won’t have to spend money of your own on their bills.

Not providing financial support to your grown kids when you can’t afford it doesn’t make you a bad parent. And you shouldn’t compromise your retirement to write those checks.

If you retire without having saved enough, you might end up having to be a burden on your kids later in life. And that’s probably the last thing you’d ever want.

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