You have worked hard to achieve your retirement savings to date, and as you approach retirement, it will be increasingly important to protect your nest egg that will provide your future income stream.
One potentially devastating drain on future income is closer than some wish to think. As parents, we always want to help and protect our children, but where does this consideration end when it comes to helping our children financially?
When our children have financial struggles, how do we help them, yet not put our retirement in jeopardy? Our children may have a hard time finding work due to lack of education, training, or discipline. They may be living beyond their income, not saving money or paying their bills in a disciplined manner. Whatever the cause, adult children may ask parents to bail them out or lend them monies which are often never paid back. How do we help them help themselves?
Effectively, parents’ retirement resources are being tapped, which can reduce their financial security. It is very important to not risk your financial independence when helping someone else. If you can afford it, give a small one-off gift for reasonable advancements in an educational course, for a health emergency if necessary, or for a minor, or a twenty-something child just starting out.
Parents may also feel guilty for their adult children’s financial mess, but don’t. Avoid enabling older adult children with your cash, out of emotional despondency, or they may never learn how to earn their keep and stay dependent on parents.
Recognize the following to stop bailing out an adult child:
- Their financial issues are NOT your problem.
- You are ONLY responsible for your financial future.
- Don’t allow your savings to be drained by ANYONE.
By following the above tips—as hard as it might be not to help—you avoid enabling an adult child when you delay the urgency for them to take responsibility for their financial crisis. Simply let them know that you will support them with love and encouragement, but not with money.