Parents financially supporting adult children ruin retirement

Everyone wants the best for their kids.

Whether it’s happiness, health, or wealth, parents and guardians want their children to have an abundance of each—but at what cost to their own livelihoods?

Courtesy of skyrocketing rent prices, soaring inflation, student debt, and a turbulent post-pandemic job market, parents of Gen Z in particular may have to support their children more than previous generations.

A recent survey from Bankrate found that 68% of parents are either supporting, or have supported, their adult children in the past—saying as a result they delayed their own financial milestones, retirement, paying off their own debt, and even had to take cash out of emergency savings.

Now, Gen Z and millennials say on average they shouldn’t have to start paying any bills until they’re 22.

The data found millennials think they should begin contributing at the age of 20 to the likes of cell phone bills on family plans and subscription services. By the age of 21 they felt they should pay for their own cars, and by 22 their own rent.

Gen Z wanted independence even later, saying they wouldn’t want to pay rent until they were 23, or cover their own travel costs until they were 21 years old.

Their parents—Gen X and baby boomers—disagree, saying some bills should start being paid back from the age of 19.

“Helping my kids so much was a huge mistake”

For Mark Lacy, helping his two sons out since they graduated from high school has resulted in a $400,000 hole in his retirement funds.

The Seattle-based 65-year-old has supported his children, now both in their thirties, with expenses ranging from college tuition to plane tickets—deciding this year that the “Bank of Dad” had finally “gone out of business.”

“For some reason my generation has felt this great obligation to keep paying and allowing our children to avoid taking adult responsibility,” Lacy said. “I don’t know where it came from because our parents didn’t do that, to help our children avoid the reality of adult lives.

“I’m convinced that this weakens our culture and our economy by continuing to coddle adult children and not send them from the proverbial nest to take on that responsibility.”

He’s not alone. According to research from Age Wave and the Harris Poll of more than 7,000 retirees, 59% of pre-retirees would like to set better boundaries with family members (or close friends) around their financial generosity.

Furthermore, 63% of the retirees questioned said they wanted to limit the levels of financial support they gave to adult children or relatives, with a further 55% saying they wanted to limit the levels of bequests to their heirs.

Lacy believes that some of the behavior comes from peer pressure, with parents seeing what their friends and peers are doing for their children and feel obligated to do the same.

“You see these other kids getting these benefits and your children are seeing that happen. Some of it you do to keep the peace—write the check and move on,” he explained.

But ultimately it “all comes down to the parents,” Lacy said. “We’re the ones that have to have the responsibility to say, ‘I don’t care what Johnny next door has, we’re not doing it.’ You have to have the backbone.”

Lacy’s advice to other parents is simple: “Sit down with a calculator and a calendar and do the math. You have to be willing to have difficult conversations not only with your spouse but with your children, have the courage to live in the truth.

“Hindsight’s 20/20. If I had it to do over I would’ve held more firm on some choices. I only have so many years to replace the dollars I’ve given them.”

“Immense sacrifice”

Tonya McKenzie and her husband never planned on supporting their children past the age of 18. But when their eldest son—now 23—chose to attend Sarah Lawrence College in New York on a basketball scholarship, they realized they had no other choice.

Like Lacy, McKenzie said she never had any support from her parents, but the California couple’s son moving across the U.S. to one of the most expensive schools in the country simply required their financial support.

The entrepreneur feared that without support her son would drop out of college, and so she paid toward housing, additional food, flights, clothes, and more recently a car.

The couple’s retirement plans have not been impacted because of the $30,000 a year they were paying toward their son’s expenses. However, the savings the McKenzies painstakingly built up over their lifetime have been hit.

With three other children under the age of 18, McKenzie—who is the guarantor on her son’s student loans—said she started teaching her youngest offspring about finance far earlier, setting them up with brokerage accounts and discussing the value of money.

“As a parent, you make sacrifices. You don’t take much for yourself,” the mother of four said. “We take very limited vacations. We’re both entrepreneurs, so if you don’t work you don’t get paid. There’s not a lot of excess to be leisurely, which of course adds a bit to stress levels because you don’t get that downtime. The sacrifice is immense.”

The pair have further supported their son by lending their entrepreneurial know-how, helping him set up a social media company to earn cash for his extracurriculars.

“What that did is give him the opportunity to earn more money, start building his credit, and understand taxes,” she added. “It’s not something [my husband or I] were ever taught. So although he may not understand the immense sacrifice, he knows the value in earning a dollar.”

Her advice to parents echoes Lacy’s: “Start to save early. We hear it often but we always think we have enough time. The truth is you’re wasting time by not starting early. Diversify your investments so it can come from various different ways, and teach your children that we make choices when we come to money. Everything you want isn’t what you need.”

Don’t start with the numbers

If you’re a parent looking to negotiate how to balance the books for both you and your children, JPMorgan Private Bank’s head of behavioral science, Jeff Kreisler, knows where to start.

“First, know that these situations and conversations are hard. Keep in mind, financial decisions are hard because they’re emotional and personal,” Kreisler said. “Add on dealing with family decisions, which in and of itself are also emotional and personal, and it’s even more challenging.”

He added the next step is to “remember you’re all on the same team,” and in preparation of any conversation about money, put yourself in the other person’s shoes.

Ask yourself what the other person needs to feel safe and secure, before asking yourself your concerns and goals.

“It’s important to ground the conversation on your values, intentions, and goals for your money. Don’t start with numbers,” Kreisler encouraged.

“Once numbers enter the conversation, we tend to fixate, compare, and measure them. By talking about what money means to us—security, comfort, opportunity, respect, reward, influence—then the conversation becomes about the important stuff including what you each want, fear, need, and hope for.

“This type of dialogue will reveal the purpose of financial decisions, which is the key.”

Parents worried that they may be damaging their children by overly supporting them may actually be right, Kreisler added, saying that without “learning, limits, and advice,” financial support can coddle children.

“If you’re offering financial support to adult children, make sure it’s coupled with the opportunities and requirements that they learn, grow, and take responsibility,” Kreisler said.


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