The Biggest Threat To Your Retirement Is...Your Kids?!
Barron’s has a great article on how parents’ support of their adult children may be forcing the Baby Boomer generation to work longer and depleting Boomers’ retirement savings.
This assistance often starts small and take many forms: cell phone expenses, groceries, and car payments, but can quickly balloon to much more costly expenditures: college tuition, vacations, and rent subsidies, all of which are particularly worrisome—and detrimental—given the reduced stock market outlook for the next decade. Home prices are currently high and retirement accounts have blasted off for the last 10 years, but both of these stores of wealth may soon come crashing back down to Earth.
While Millennial generational stereotyping can certainly play a role, the dynamics are more complex: when adjusted for inflation, college tuition costs have more than doubled in the past 30 years, home prices that have contributed to Boomer wealth have prevented Millennials from owning property, and many job categories’ real wages haven’t increased over the last 30 years.
The article lists several strategies to help navigate the desire to support your child’s success while not threatening your financial future, such as setting firm boundaries, funding 529 plans, and, when necessary, cutting off financial assistance. Check out the full article for more horror stories and strategies.
Let us know in the comments: did you provide support to your adult kids? If so, what amount was reasonable and what was unreasonable?