Are your kids putting your retirement at risk?

More than half of parents are helping out their adult kids who aren't in college, and 26% have taken on debt to do it.

By MSN Money Partner Jul 11, 2011 5:37PM

This post comes from Catey Hill at partner site SmartMoney.


If you're like most boomer parents, you give cash or some kind of financial support to your adult children. And while this is certainly a generous move, it's also a risky one, especially for those who haven't yet saved enough for retirement.


Fifty-nine percent of parents financially support their adult children (ages 18 to 39) who aren't in college, according to a new study by the National Endowment for Financial Education. Nearly half (48%) help their adult kids with living expenses, 41% with transportation costs, and 29% with spending money. When asked why they do it, 43% of parents said it was because they were "legitimately concerned" with their child's financial well-being, and 37% said it was because they didn't want their children to struggle financially like they once did.


But giving money to your adult children can have serious financial ramifications for your retirement, says Pat Seaman, a spokesperson for the NEFE. "You might not be able to save as much as you need to," she says. In fact, 7% of parents had to delay retirement as a result of their financial support of the kids, and more than one in 10 had to delay a major life event like buying a new home. (How much house can you afford?)


What's more, 26% of parents have had to take on more debt because of it, the study found. That too, can impact your retirement, as paying down debt can impact how much money you're able to save and can eat into a relatively fixed nest egg once you retire. (Are you saving enough? Try this MSN Money calculator.) Post continues after video.

As any parent knows, it can be tough to know when to say no to the kids. As a general rule, "take care of your own retirement needs before helping the kids," Seaman says. That often means saying "no" except for in dire circumstances and letting the child fend for himself. But it doesn't always mean that: "Ask yourself if you can help the kids in another way. If they need a place to live, let them stay with you for a few months rather than paying for their rent," she says.


You should also evaluate the root cause of your child's demand for money. "It's important to ask yourself whether it's a short-term crisis or a chronic condition," Seaman says. If it's something like substance abuse or unhealthy spending values, you need to have your child "open up her finances for you so you can go through them together." This way, you can help prevent future financial drains. (For more tips on how you can deal with the financial needs of an adult child, click here.)


More on SmartMoney and MSN Money:


Jul 21, 2011 5:08AM

My parents told me right after I graduated from HS that I was on my own. They said don't ask for anything because the answer is NO. Only exception was that if I went to college they would pay for my apartment and food, but only after they saw my report card. Still had to get a job during college to pay for tuition. 

I graduated with a degree in EE, had no problem getting a job, I still get emails with job offers.   Technical education is the future.  Haven’t lost my job during the recession I am thankful for that.  Would never ask my parents for anything, too proud for that.

Jul 21, 2011 7:30AM

vinniekaz:  it is NOT my duty to provide a future for my child.  It IS my duty to raise my children to be the best adults in society that they can be. And since WHEN did it become the responsibility of the parent to pay for their child's college education?!

Sorry but when I went to college the kids whose "mommy & daddy" were paying for it seemed to screw around ALOT more than the ones paying for it themselves.


I WILL NOT FINANCE MY CHILDREN they can work 3 part-time jobs if they have to. If it was good enough for their parents it's good enough for them.  Young adults these days would rather starve than give up their cell phones who pays that bill?! AND stop whining about having to pay car insurance! TAKE THE DAMN BUS!  NO BUS? buy a scooter! you probably are one of the millions who don't pay for insurance anyway! 

Jul 21, 2011 7:25AM
When does it stop being loving support of your children and actually become abuse of the parent, after helping them 5 times, 10 times, 20 times? When did adult children start thinking they are entitled to what their parents worked so hard for. Stop feeling guilty for your adult chidrens bad decisions and that is exactly what most of them are doing and expecting the parent to bail them out.
Jul 21, 2011 3:37AM

I worked for 24 years in kitchens and paid rent to parents weekly

lets face it theres enough to buy transportation and your own phone bills with a normal job

but you wont save for that house unless you get married or roomate.


think twice about having kids if your not doing good

Jul 21, 2011 7:58AM
There is no one answer to the problem.  I've been on this planet a long time and the best I can do is point out a few places where we went wrong.  I can still remember high school friends saying "My kids won't have to go through what I had to."  I think what we had to go through was training to become adults, although at the time we didn't believe so. In that training was what is left out in this era, responsibility.  It's OK to nudge a child (of any age) in the right direction but not spoon feed him or her.  They have to be told 'the bank is closed!'  If you're not firm they won't learn and prosper in the long run.  Of course a lot of people won't agree with me, especially the young adults, but that's the way it goes.
Jul 21, 2011 9:35AM
There is something to said for struggling and hard work. Parents today want to make it too easy for their children that when times get tough the kids don't know how to work through them. A little struggling never killed anyone, it usually makes us a better person and builds character.
Jul 21, 2011 7:39AM
I am 60 years old. MY parents generation didn't feel the need to pay for College, etc. I think it only became the fad with my generation. And, THEN, only after the "Keeping up with the Jone's" pressure. It is very dumb for a Blue Collar set of parents or even White Collar parents to feel the need to pay for their kids when they themselves do not have their retirement set. Peer Pressure is a terrible thing. Plus, in divorces, one or both parents try to buy Love, which is also wrong.
Jul 21, 2011 5:09AM
Don't blame it on the kids. Blame it on the ex who decided she was no longer "happy" in the marriage a year and a half before my retirement.
Jul 21, 2011 5:07AM
 The way this country has changed since the eighties? Makes me glad I never tried to raise a family. My co workers are always talking about having to do for there 40 year old children. My mother raised me to do for myself at a very young age. I was the kid outside your door with a lawn mower asking to cut your grass. Back then there was no such a thing has riddlen. Or a Xbox 360.  Today grandparents are raising there grandchildren. Or paying there kids light bills. My many nephews and nieces are a nice sub to a family. I don't need kids, or want them. The reasons are not money savings. The reasons are I don't want someone to suffer what's coming our way.
Jul 21, 2011 9:35AM
I think it's funny how parents worry about their kids struggling with financial issues like they did.  I wonder if they realize that is all part of growing up and becoming an adult.  Heck, let your kids grow up finally and let go of those control issues already.
Jul 21, 2011 7:55AM
  We have three adult children and we don't help them financially one bit.  We struggled when first starting out and they struggled first starting out.  They became financially responsible because they had too and worked hard because they had too.  They were not fooling around playing sports in high school but all had after school jobs.  Learning to play games may be fun but it isn't like learning how to work and learning the value of a dollar.   Too many parents want to be friends with their children rather that teaching them the hard facts of life.  Besides, the parents aren't going to be around forever to bail out their kids. Thats when they will finally have to grow up but it will be too late. 
Jul 21, 2011 11:15AM

My family with six children.

Parents insisted on either College OR JOB after High School.

Parents helped very little after high school.

All children are grown and self sufficient .


Too much help is harmful ... don't reinforce irresponsible spending behavior.

Eating out, buying bottled water, spending sprees, trips to the beach, expensive clothing,

I Phones, etc.

Then parents are paying children's rent , Car payments, Car Insurance & utilities !

They will never learn to budget - Hey sounds like US Congress !

Jul 21, 2011 8:41AM
Parents should not have to bail their kid out of debt and exorbitant lifestyles that they cant afford but try to live anyways. It always gives me pause when parents say, I do not want my kid to struggle as much as I did.  And really the kids should not, but that should not mean that they should be given every privilege at the risk of the financial health of the parents. This should not be an excuse to indulge your kids and make them into dependent adults. It is not good for yourselves as parents and the kids as adults.
There is also another side to this article, the fact that parents are sometimes dependent on their kids for financial help. And for those in this position, bailing out parents can take a toll on their own financial well being.

Jul 21, 2011 9:09AM

Wow.  Can somebody adopt me?  I would love to have parents like this!  It would be so nice!  No wonder I marvel at how my peers get new cars in their twenties and own property, too.  


Hey, I read in another article that 60% of first time home buyers are given the down payment.   Hard to keep up with those lucky folks, too.


So seriously, this really does mean that people who claim to have gotten everything through hard work are deluding themselves.  In fact, based on these numbers, the majority are not getting stuff via hard work.  So why do we have no empathy for poor people without an education or health care?

Jul 21, 2011 8:49AM

Risks to retirement:

#1. Trusting the government with 12.4 percent of my income for almost 40 years now. Now they are going to take some or all away.

#2. Subsidizing the so called job creators. Giving them 15% Capital gains rate while others pay 40% for Federal, FICA and state. Some want them to pay 0% captial gains.

#3.  Bailing people out who refinanced their homes so they could have fun.

#4. Cash for Clunkers.

Could go on and on. Yes I help my kids more than I should. Problem today is that we spoil them from day 1. But other than that there are far more risks to my retirement than giving money to my kids.

Jul 16, 2011 12:38AM

i think all those who posted have made some good and bad points. However, I think parents who help their kids do so for several different reasons. some do so out of LOVE some help because of GUILT some help because they are naturally giving people who believe that GOD wants you to help others.


I think its no one else business what another do with their children that's why they are called their children.


This world is filled with so many nasty selfish people who think they have  all the darn answers to life.Yet, they don't realize they rely on others as well.


This  I , ME  GENERATION has been around for over 40 yrs, too many people really think that the only thing that matters is them and their own personal happiness. Take note of this THE WORLD DOES NOT REVOLVE AROUND ONE PERSON everyone has a part to play in our Successes and Failures. 

the whole entire world was not built by one man, nation , or race.


So just because you THink you have made it big on your own in this mean world, don't forget, you did not do it alone.  Yes, all of us owe someone,a thank you for their help and in return we should want to help  another person succeed.


But that's not something most  parents teach that's something they have to DEMONSTRATE. 

NOW all of those who are highly educated read between the lines.



Jul 15, 2011 10:07PM
My own sons did not qualify for financial or academic aid.  They got excellent Catholic high  school educations at the school where I was librarian.  All began their educations at good local public schools, but transferred to my Catholic high school.  The oldest had ADD without hyperactivity, was left handed, poorly coordinated and, I was told, had an IQ of 99.  We transferred him to my school and he blossomed in a smaller school with smaller classes and needed support.  He went on to graduate college in a 5 year program on time, got a job teaching in the south where his team brought its failing middle school to A status in 4 years and later taught at a failing legacy high school with his original principal and many teaching colleagues.  That school became a B+ school in 4 years.  Along the way, he got a Masters in Curriculum Development, and created AP courses in Macro and Micro Economics, became a homeowner, met and married.  He has told us that he will always be there for us financially since we supplemented the money he could make during summers and borrowed so that he graduated owing only $5,000.  His wife bought a house for her parents to live in as her renters in their retirement in the same plan where  the 2 of them live.  She also feels she will always take care of them as well as they took care of her.

Our second son had school phobia when he was in second grade, middle school, and again in high school.  He went to the same high school and college as his brother, changed his major 3 times, graduated in 4 years, met and later married his wife and gave us our first grandson 3 years ago.  His wife has a PhD and owes $60,000 in loans.  He followed his brother's footsteps and owed $5,000 at graduation, like his brother.   We told him no one school is likely to meet all the needs of all the children in a family, but he campaigned to attend the high school and college he knew best from visits with his brother.  He, too, has told us

Our youngest was developmentally delayed, but managed to catch up and graduate with a degree in Spanish and Criminal Justice.   Unfortunately, he had his first seizure at 18 and wasn't diagnosed til his last year in college.  He has returned home while he gets stabilized on a successful course of control meds, works full time, pays room and board and regroups.  His dreams of working in ICE or DEA went up in smoke.  He is part of our family and wants to help us as we get ready for retirement.

In a family and a Catholic worldview, we are, in fact, responsible for each other in every way.  Society is designed to work best when its members support each other to be the best people we can be.  It is that which pleases God, because we get Jesus' message of love shown by supporting each other, no matter our ethnic origin, personal belief system, economic status, cultural background.  Parents care for children, children care for parents.   People are responsible for themselves first, but helping each other temporarily is appropriate.  It must, however, be in the sense of teaching someone to fish, not giving them fish for years.  Enabling is more than a fine distinction.

On the contrary, if the world operated on the assumptions above, we'd all be better off.

What say you??

Jul 21, 2011 10:14AM

My mother (my father died when i was 14) did not have to financially support me after college.  Why?  Because I got a full time career level good paying job.  With 9.2 unemployment, my 20 year old son can only get a minimum wage job, that' won't allow him to be on his own.  So what do you do, kick him out of the house, make him homeless, and take the chance he will turn to crime to make his way?

No, we brought the boy into this world, we have to take care of him.  Now he does pay some of his expenses like car insurance, gas and a little entertainment, but no way he can live on his own on $800 a month, not with a 1 bedroom apartment costing $450 a month, car insurance at $200 a month (and that low only because he is on our policy, it would be more if he got it on his own), and gas at $3.50 a gallon at least.

Hopefully he can move up where he works or get a better job with some work experience, but with Obama's meddling that's doubtful

Jul 21, 2011 8:02AM

I'm helping my kid thru college.  (key word-- "Help")  Uncle Sam helped me, and  we make enough that my kid doesn't qualify for government handouts that I did.  After undergrad, he'll be "helping" himself.  I think that's how Pell grants were intended-- so that the next generation doesn't need them. 

If my next oldest kid doesn't do college or trade school, she'll have to be self supporting and out of my house 6 months after graduation... and she's been told that since she was little. 

Jul 15, 2011 9:24PM

Marion.  Obviously, any point I make would fall on deaf ears with you, you being so smart and all.  Thanks for mentioning your I.Q.  Very classy.


However, I would argue almost every point you make, but they are too numerous, so I will condense my comments to the few of your points worth disputing.


First of all, my children are not responsible to take care of me when I am old.  They didn't get a vote on whether to be born or not, so I have no right to hang that obligation on them, and I don't.  I have made my own provisions for my eventual care as I age.


Secondly, everyone is not responsible for everyone else.  That is the socialist-leaning view that got us into the current financial mess this country is in.  We're told we're supposed to take care of everyone, no matter how lazy or unmotivated they are, or how many consecutive bad decisions they make.  The fact is, everyone that is not mentally impaired is responsible for themselves.


Thirdly, your generation and its sense of entitlement is at least as responsible for the current mess as the baby boomers are.  You have never learned the difference between wants and needs.


Finally, family, while important, is not all that matters.  Family can frequently be the largest drain on a person there is, whether it be emotionally or financially.  Oftentimes, relationships with people outside one's family are far more rewarding in many ways.  Blood may be thicker than water, but I wouldn't hesitate to write off an obnoxious and worthless family member any longer than I would an obnoxious and worthless non-family member.


We'll see as this continues whether your posting or mine gets the most approval.  Good luck.

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