It’s a common refrain that if you’re able, you should be planning for retirement by budgeting, diversifying your portfolio, and making the most of compound interest. However, if you’re a parent, there’s a good chance you’re limiting your retirement savings by doing one common thing: paying for your adult children’s living expenses. According to a recent survey, half of the parents with adult kids routinely help them financially. While it may be tempting to cover some bills while your kids are starting out, it comes at quite an expense. Working parents who support adult children contribute more than twice the amount each month to their adult kids than they do toward their own retirement accounts. As you get closer to the age where you’ll need money for retirement, that’s a lot of money NOT going into your 401K, IRA, or other retirement account. The average amount of monthly support that parents provide for each adult child is $1,474. That’s more than $17,000 a year. Parents surveyed confessed that they spend an average of $220 a month to help cover their adult children’s grocery costs, $63 a month to assist with cellphone bills, and $653 a month to help with rent or mortgage. Financial experts recommend being honest with your adult children, explaining that your retirement savings is suffering because you’re helping to support them. If an adult child is living at home, ask for money toward rent. Set limits, and when that limit is reached, your financial help ends. Most of all, you can provide emotional support instead of financial help. This could include things like helping your adult child to look for a less-expensive place to live. The key is to be supportive and not confrontational. Remember, there’s a limited amount of time to save for retirement, so prioritize it. As always, saying “no” is the hardest thing a parent has to do.
