If you're a parent, you know raising kids is very expensive. And for millions of parents throughout America, the costs don't end when children reach adulthood. In fact, parents are spending a small fortune to help their grown children -- and it could be costing them their own financial security. 

Are your grown children ruining your financial future?

According to a recent study conducted by Merrill, American parents are spending more than $500 billion annually helping their adult children. A quarter of these costs involve education, while the rest goes to everyday expenses, home down payments, car-related costs, cellphone service, and even vacations.

Old man grabbing back piggybank from grasping arms.

Image source: Getty Images.

All this money is being transferred from the older generation to the younger one at a time when far too many pre-retirees have far too little retirement savings.  It's also occurring at a time when seniors face record levels of debt, including student loans for their own education or college for their kids. 

While some parents can afford this type of help, many more are compromising their future by making financial gifts they can't afford to make. You may be one of them if you're giving your children money but:

  • You're not maxing out your 401(k) or IRA.
  • You don't have your own emergency fund.
  • You have debts other than a mortgage you're struggling to pay.
  • You're not on track to pay off your debt and have a substantial nest egg by the time you hit retirement.

What should you do if your kids are jeopardizing your financial security?

If you're currently helping your kids but aren't in a financial position where it makes sense to do so, it's important you change course -- even though cutting off your kids may be difficult. The key is that both you and your children understand putting your retirement at risk won't help you or them in the long run. 

You likely don't want to pull the plug on your financial support right away, especially if your children are depending on you. Instead, set a date when you'll stop making financial contributions and let your children know well in advance. 

You can also look at your budget to see if you can still afford to provide some financial help while reallocating most of the money toward shoring up your own finances. Or you can offer assistance that won't cost you as much. If you're currently helping out with rent, you could offer to allow your child to move back home for the short term. 

Your financial security needs to take priority

As difficult as it would be to stop financial support for your kids, they have their whole lives ahead of them to earn and save. You have only a limited amount of time left in your career to prepare for retirement, and you need to make sure you don't end up broke in your old age.

Your kids should hopefully understand, and they'll likely appreciate your making the responsible move now instead of impoverishing yourself and being forced to rely on them late in your life.