As parents, it’s our job to wean our children off things as they get older and more independent:
- Crying at the grocery store when they can’t get the Hot Wheels they want.
But our job doesn’t end there. We also need to wean them off financial support.
Here are some startling statistics:
- On average, parents who financially support their adult children give them $1,000 per month for expenses like food, health insurance, rent, cell phones, tuition, and even travel.
- Parents who are still working and supporting their adult children spend 23% more on their children’s expenses ($605 per month) than they do contribute to their own retirement or savings ($490 per month).
- If their adult children needed financial help, one in four parents said they’d pull money from their retirement accounts and 22% said they’d delay their retirement in order to provide support.
How Supporting Your Adult Children Could Affect your Future
In many cases, the support you give your adult child might creep up on you. If you sit down and look at the numbers, you could be surprised at how much you’re contributing over time.
Deep down you probably already know that the money you’re giving your adult child should be going into your own retirement savings. But other things can be impacted as well:
- Increased expenses: Supporting adult children can also increase your expenses, which can affect your ability to maintain your retirement lifestyle. This can include increased housing costs if your children are living with you or if you are providing financial assistance for their housing.
- Increased debt: If you are financially supporting your adult children, it can also increase your debt load. This can make it harder to pay off debt and can affect your ability to save for retirement.
- Delayed retirement: If you are providing financial support to your adult children, you may need to delay your retirement in order to continue to provide that support.
How to Financially Wean Your Adult Child
When it comes to cutting the financial cord, much of it comes down to communication. It’s okay to sit down with your adult child and be honest about your own financial situation so they understand that there isn’t a never-ending well of funds.
You might also consider parameters around the money you’re giving. If you have the means, you may want to offer payments toward things like job search expenses or professional development courses. These types of investments can help your child get on their feet more quickly and avoid accumulating debt.
A financial advisor can help you as well. Make an appointment and discuss where you have financial flexibility and make a plan. If your adult child comes back to ask for more, you can always say, “My financial planner has advised that this is all I can give.”
And if none of that works, remind your adult child that if you have no money for retirement, you’ll be asking them for support later and possibly a couch to sleep on.
SOURCE: Wabi5, Half of US Parents Financially Support Adult Children, 04/22