The Sneaky Reason You Might Fall Behind on Retirement Savings

Key Points

• Supporting your grown kids could leave you with inadequate cash reserves for retirement.

• It’s important to prioritize your savings and only fund your kids’ lifestyle if there’s extra money to go around.

• There may be other ways you can support your grown kids without sacrificing your nest egg.

• The $23,760 Social Security bonus most retirees completely overlook ›

As a parent, I know how hard it can sometimes be to say no to a child. Granted, I have no problem saying no to my teenage son when he asks if I can pick him up at midnight from a friend’s place. Staying up that late is just not my thing. But when my son asks for $20 to grab dinner with his buddies, that’s a little harder to say no to (though I do set boundaries on the number of times per month he can ask).

In talking to friends whose children are older than mine, one thing I’ve learned is that you never really stop being in a position where your kids need your support — whether it’s emotional, logistical, or financial. But if you’re not careful, going overboard on financial support could leave you with a serious retirement savings shortfall on your hands.

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Don’t put your retirement at risk

When I recently read that parents who support grown kids provide an average of $1,474 monthly per child, according to Savings.com, I was horrified but not totally shocked.

Navigating young adulthood has been a very tough thing in recent years. Stagnant wages, high costs from inflation, and student loan debt are trapping many 20- and even 30-somethings in a cycle of not being able to get ahead financially.

At the same time, I think it’s highly problematic that working parents who support grown kids are giving those children more than twice as much money per month as they’re contributing to their IRAs or 401(k)s — $1,589 versus $673, respectively, according to Savings.com.

It’s not that $673 isn’t a perfectly decent monthly IRA or 401(k) contribution. Rather, it’s that parents seem to be prioritizing their grown kids’ financial wellbeing over their own retirement security. And that’s not something I can get on board with.

Find other ways to help

If you’re a parent of grown kids and your financial situation is fantastic, then sure, why not help out if you can? But if you’re still in the process of trying to build a retirement nest egg, your personal savings should take priority over any money you give to your grown kids so they can cover their bills. And if supporting grown kids is causing you stress, you need to have a talk about that ASAP.

That doesn’t mean you can’t support your grown kids in other ways, though. Rather than give them money, offer them help.

Volunteer to watch your grandkids a few afternoons a week if your schedule allows for it so your kids can save on babysitting fees. If your work schedule isn’t so demanding and your grown kids tend to burn the midnight oil, drop off leftovers from meals you’ve cooked so they don’t have to spend money on takeout.

There’s nothing wrong with wanting to help your children as much as possible, no matter their age. But putting your retirement at risk to support your grown kids is a mistake you might sorely regret. So it’s important to know when to say no.

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