The kids may be grown up, but mom and dad are still helping. Baby Boomers are helping their grown children financially at greater rates, according to recent surveys by Ameriprise Financial.
One survey found some 93% of affluent Baby Boomers provided support to adult children in the previous year. Almost three-quarters of those who are still helping grown children said they are paying off their college loans. 55% have allowed adult children to move back home without charging rent. And 53% have helped them buy a car.
Yet, only one in four Boomers said they were putting money away for the future. Many Boomers feel sandwiched between children who are unemployed or struggling to pay down their student-loan debt and aging parents who are facing complex health and financial issues. At the same time, they’re trying to prepare for their own retirement. The demands on their time and money can feel endless.
Although few reported taking money from retirement accounts to help their kids, many said they slowed down their savings rates and failed to make catch-up contributions to retirement accounts.
There may be two important lessons for parents and children to consider.
- Unconditional financial support can threaten or even sabotage parents’ retirement goals and security. One of the best gifts parents can give their children is to avoid becoming financially dependent upon them in their senior years.
- Some parents say the best way to get college-age children to appreciate their education is to make them pay for part or all of it themselves. Some 72%of parents from affluent families believe that children who pay for at least a portion of their college education learn responsibility and financial skills.
Teaching our children how to handle money may be even more important than paying for all their needs.
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