Being a parent is a lifelong commitment. Your kids might go off to college, buy homes of their own, and start their own families -- but at the end of the day, your parenting duties may be perpetual, to some degree. That might extend to offering up financial support, even when your kids are at an age where they should, in theory, be capable of paying their own expenses.
But supporting your grown children financially has the potential to mess with your retirement plans. So if that's something you've been in the habit of doing, you may need to rethink things.
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You don't want your own nest egg to fall short
It's easy to see why young adults today may be struggling financially. Many are saddled with student debt, which can be a tough thing to pay off even on a pretty generous wage. Throw in sky-high housing costs, and it's no wonder that so many young adults are having difficulty paying bills.
The problem, however, is that only 45% of young adults aged 18 to 34 say they're completely financially independent, according to a recent Pew survey. As such, it's not so shocking to learn that 59% of parents say they've helped their children financially in the past year.
If you're among that later percentage, you might think you're doing right by your kids -- and helping them out in young adulthood is definitely noble. But one thing you really don't want to do is compromise your long-term financial security to fund your kids' expenses when they're technically able to go out and earn their own money.
It's one thing to throw your grown children a few hundred dollars a month to help with their rent or mortgage payments if you're already maxing out your 401(k) or IRA and have money to spare. But many people who are slowly but surely nearing retirement aren't in that boat. And frankly, if you're at all concerned about the amount of retirement savings you have, then you should absolutely put your own needs first and make it so your kids come second from a financial standpoint.
Borrowing money is far from ideal. But if your kids need to carry a bit of debt to finance their lifestyles until their earnings grow, let them bear that burden, rather than taking funds from your cash reserves that should be earmarked for your retirement.
Once your career ends, your options for earning money may be quite limited. Your grown kids, on the other hand, probably have decades in the workforce ahead of them. So if they can't manage to cover their expenses based on their earnings (or they can't whittle their expenses down enough to make their paychecks work), let them be the ones to make a financially precarious move -- in this case, taking out a loan or letting existing debt linger a bit longer.
Financial help now could burden your children later
If you've worked hard all your life, you deserve a retirement that's free of financial stress. But if you devote too many financial resources to helping your grown kids, you may not get that.
Plus, if you limit your nest egg contributions to help finance your grown kids' lifestyles now, you might end up in a really bad place once retirement kicks into gear. At that point, you may have to ask your kids for financial support, which isn't a good situation for anyone.
It's not easy being a young adult today, and it's easy to see why your grown kids may be feeling squeezed financially. If you can afford to help them out while continuing to fund your IRA or 401(k) to the max, then why not? Otherwise, you may want to limit the support you give them to support of the moral variety.
