Don’t Let Your Adult Kids Eat into Your Retirement Money!
Having children is an incredible choice to make in life. They bring joy, fulfillment, and a sense of value to the lives of many. They are delightful and can even help you feel a sense of completion about yourself. However, they are also financially taxing and a great responsibility! Yes, raising children is all fun and hard work, but once children have reached adulthood, there comes a choice to make – cut the purse strings or run your retirement funds down.
The Cost of Raising a Child
We’re looking specifically at the costs after children graduate from high school. Of course, higher education costs vary across states. But it is the parents’ responsibility to educate their child right past high school and through to their degrees, diplomas, or certificates. While societal pressure might be on parents to support their children until they start working, it is not a feasible option for many. Even in parts of the world where higher education is free, there are costs involved in helping your child to college. Parents are spending too much on their kids and these funds could be better spent on retirement.
Placing it in Perspective
Let’s place this all into perspective using a scenario or two. Say Bob and Sarah have an adult daughter, Susan. Susan graduates from high school and should now either study or get a job. As her parents have done their share on educating her, she needs to do her bit too. However, it is most likely that her parents end up funding her further education. They might do this through student loans or their savings, or they let her stay at home with them. If they send her to study, they pay for her apartment, food, fees, stationery, and books, among others, and pay her an allowance.
If she stays at home, Susan probably won’t end up finding a job or contributing to the household expenses. At the end of the day, Susan doesn’t learn how to fend for herself either, and Bob and Sarah end up burning their retirement savings. And now they have very little time to save up their money again.
Ideally, parents should be saving up for their futures, not for that of their children. Of course, if there happens to be enough for everybody, the situation is different entirely. But it is happening all too often that parents overindulge their children even after they grow up. This only spoils them with cars and houses, only to receive nothing in return when their kids get on their feet – if they do. Parents will be left longing for their children’s care after retirement, or they end up working until their last day. It isn’t a healthy or a pretty situation, but it is happening all over the world.
Changing the Culture
It’s probably time that parents start raising their children to understand that they can support them emotionally and financially, but only until adulthood. Thereafter, children should learn to fend for themselves as the parents need to start saving up for their retirement. This would involve a lot of downsizing and cutting costs to push through their last chance of fattening up their retirement funds. So, that they can have a happier old age without bothering anyone or being in dire straits.
Children need to know that they have to work hard during middle and high school and get good grades. This will help them secure scholarships and bursaries for college and support them with their dream. They need to spend school holidays volunteering or doing sideline jobs just to help them get a feel for the work environment and what is to come.
Financial advisers are encouraging parents to adopt a new mindset about their retirement and about supporting adult children. They go so far as to suggest that children who insist on borrowing funds, you can use your financial advisers as a shield. Meaning, all the money decisions will be taken only after discussing it with your financial advisor. It isn’t easy cutting the purse strings, but if you don’t do it, you could find yourself in a sticky situation in your older years – and neither you nor your kids will want that!
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