It can be difficult as a parent to not help out your children when they are in need financially. But when is enough, enough?
Baby Boomers are risking their retirement by helping their adult children long term.
Due to the fact that unemployment in some parts of Australia seems to be increasing and the minimum wage is nothing to be proud of, parents are doling out cash to cover rent, mobile phone bills and much more.
Research suggests that people are spending more these days on their adult children than on themselves. The problem with that is it’s putting strain on the Baby Boomer’s retirement. The more the Baby Boomer puts out for their children, the less they are able to put away for themselves.
Sometimes parents help their children assuming that the situation will be temporary and it lasts for years. Parents are footing the bill for children who are even making a decent living, assuming that buying groceries and clothing regularly is okay.
The shocking part is some Baby Boomers are actually withdrawing from their retirement fund to cover expenses for their adult children.
So what’s a modest handout to your children?
No one is saying that you can never help your children when they are in need, but it should never come at the expense of your retirement. It’s great if you are able to help pay for things in your child’s life. But if you are using your retirement to do so, it can be a big mistake.
What Not To Do:
- Cash out retirement to pay for a wedding or help in the purchase of a home.
- Pay your child’s rent. If you want to help them out temporarily; give them 6 months to get back on their feet and stop paying immediately after that.
- Subsidising your children’s income when you have extra money instead of maxing out your superannuation fund.
If you are not well off you need to tell your adult children that you don’t have the money to give them. At some point, your children need to make it on their own.
Whatever the reason is for your child’s need for extra money, it is hurting baby boomers. Some can’t even begin to think of retirement as their funds will dwindle due to the rate they are spending on their children.
The sad truth is that many parents will help their children even though they are out purchasing Starbucks coffee in the mornings and getting pedicures at night. Parents are desperate to make their children happy while hurting themselves in the long run. Not only could helping your children hurt your retirement but it’s also sending them the wrong message. You are teaching them to ask for money instead of working hard for the lifestyle that they want. A better message would be to teach them how to save instead of burning all the money they earn.
A lesson in tough love is sometimes necessary in these situations. Have you helped your kids out financially – tell us in the comments below?
