Citing statistics from consulting firm Age Wave and Bank of America Merrill Lynch, a new article from Barron’s highlights that nearly 80 percent of parents give some financial support to their adult children—to the tune of $500 billion a year. That’s twice what parents put into retirement accounts, wrote reporter Reshma Kapadia, in her article How Your Kids Can Ruin Your Retirement — and How to Make Sure They Don’t.
Parental help often starts small, covering expenses such as cellphone bills, car payments, groceries or health insurance. But temporary assistance can quickly turn permanent and pricey, financing rent and down payments, grandchildren’s college educations and support for offspring going through divorce or battling drug addiction.
For those intent on helping their adult offspring, Kapadia writes that 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.”
In sum, giving to children requires good communication and firm boundaries. But striking the right balance can help parents find the feeling that’s so elusive: peace of mind, for their children and themselves.