More at the Source.Barrons said:Bill Benson and his wife had planned to fortify their retirement savings once their children left home, so they’d have enough to travel and relax. But at 68, Benson is still working full-time, and that empty nest he envisioned isn’t so empty. Benson’s eldest daughter moved home with her two young sons after a divorce, and the two children he and his wife adopted later in life are just now finishing high school and starting college.
Along the way, Benson exhausted a federal pension to pay for one son’s special needs, and he expects to keep supporting that son, as well as his grandsons, now ages 3 and 5, through retirement—whenever that may come. “It’s nose to the grindstone,” says Benson, who consults full-time on aging policy. “We had to make choices to spend on our kids—because you have to do that. I guess it’s a crazy modern family, but we also know we are fortunate, with decent jobs and good incomes.”
Benson’s situation illustrates one of the biggest threats to your retirement—your kids. And it’s not just about the high cost of college. Parents have long tried to set up their children for success, but today that assistance is costing ever more, and lasting far longer. The cost of a four-year private college averages $48,500 a year, double what it did in the late 1980s. And financial independence is increasingly delayed. About 15% of 25- to 35-year-olds were living at home in 2016, based on a Pew Research report. That’s five percentage points higher than the share of Generation Xers living at home when they were the same age, and almost double the share of today’s older retirees who were in the same situation years ago.
Nearly 80% of parents give some financial support to their adult children—to the tune of $500 billion a year, according to estimates by consulting firm Age Wave. That’s twice what parents put into retirement accounts, according to a 2018 survey from Bank of America Merrill Lynch and Age Wave. Almost three-quarters of respondents acknowledged putting their children’s interests ahead of their own retirement needs.
For those intent on helping their adult offspring, financial advisors stress running the numbers and bringing the children into the conversation, so they can see what their parents can afford, reducing the guilt some parents feel for saying no. “When money and emotions mix, parents don’t make decisions in their best interest,” says Edythe De Marco, a financial advisor for Merrill Lynch. “Oftentimes, parents get into financial hot water because talking about money has never been that common.”
Are you or known someone in that situation!?
