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Balancing Support & Your Retirement

Balancing Support & Your Retirement

April 12, 2024

Are you a parent caught between wanting to support your grown children and safeguarding a secure retirement for yourself? If so, you're not alone! As parents, it’s understandable that we want to keep supporting our children even as they grow older, but we need to make sure that support doesn't stretch our financial safety net.

When I say you're not alone, I'm not just trying to make you feel better. Providing financial support to grown children has become increasingly common in today's society. Nearly half of parents with a child older than 18 provide them with at least some financial support, according to a report by Savings.com. Many parents find themselves dipping into their retirement savings to offer some level of support, whether it’s helping them through college, assisting with housing expenses, or helping out with bills when money is tight. As well-intentioned as this support is though, it’s important to keep in mind that sacrificing your savings to support grown children could derail your retirement plans, leaving you vulnerable to financial insecurity in your golden years.

Here are some thoughts that might help you navigate continuing to support your kids while still protecting your own financial future:

  • Communicate and set boundaries

Communication is essential! Having open and honest conversations with your children about money can help avoid potential frustration and upset feelings down the road. Be clear about your financial limitations and boundaries, expectations, and the reasons behind your decisions. 

Setting limits on financial assistance and encouraging your children to take ownership of their own financial well-being will discourage dependency while empowering them to become more financially independent in the long run.

  • Budget for it

Creating a budget will give you a clear overview of your income and expenses, helping you to understand your capacity to offer financial support while balancing & prioritizing your goals. Budgeting for deposits to a separate 529 plan, for example, will give a clear idea of how much financial support you'll be able to provide for higher education expenses. Factor in your children’s needs but be sure to make saving for retirement a priority!

  • Look at other options

Look for alternative solutions that will allow you to help support your children without putting your retirement at risk. Explore options such as scholarships, grants, and financial aid to help with the cost of education. Use your network to help them find a better job opportunity or supplemental income source. Have them over to cook meals together. Not only will it help keep you connected but help them with food expenses as well. Get creative!

Also, think about ways that you can encourage financial literacy and skill-building. Instead of simply helping them with their bills, share your wisdom and guidance on budgeting, saving, and investing. Encouraging them to take charge of managing their own finances will help them develop important money management skills that they can use to help plan for their own retirement someday.

It’s important to balance the desire to support your children with the need to prioritize your own financial well-being, especially when it comes to your retirement plan. With a bit of planning and foresight, it's entirely possible to support your kids on some level while safeguarding your retirement security.

Remember, it's not about saying "no" to your children; it's about saying "yes" to your own financial well-being and retirement security.