The cost of living crisis has prompted many young Americans to rely on their parents to make ends meet.
According to a latest report by Savings.com, about 50% of Americans with children over 18 provide regular financial support.
These young people receive an average of $1,474 in monthly support, with Z Gen American expected to receive an average of $1,813 per month, while the average millennials are expected to receive $863 per month in 2025.
However, parents also face the same cost of living challenges as their children. This is how their efforts to raise adult children for adult children put their financial future and retirement at risk.
Savings.com also found that working parents who financially support their adult children spend more than twice the monthly retirement contribution. The report said that the parents only reserved $673 in nest eggs on average.
Elderly people across the country are already facing a retirement crisis. According to AARP, nearly 20% of nearly 20% of adults have no retirement savings at all. Meanwhile, 61% of them are worried that they will run out of funds after leaving the workforce.
According to a survey by the National Aging Commission, a shocking 80% of senior Americans are now struggling economically or at risk of economic insecurity when they retire.
Many parents have the potential to be part of this struggling retiree by contributing more to their children’s lifestyle than their own savings and investment accounts. Here is how you can avoid the same pitfalls.
Read more: BlackRock CEO Larry Fink has one important message for the next wave of American retirees – and that’s how he says you can best survive the U.S. retirement crisis
While you may be obliged to help your child, you are also obliged to be your future self. Balancing the needs of a retirement plan with the needs of a child is tricky, but it is crucial.
It is a good idea to have a public conversation with your adult children and set clear restrictions and boundaries for your financial assistance. For example, you may strictly limit how much you give them monthly investment contributions below.
You can also provide financial assistance regarding the accompanying string. If your child wants to continue to receive monthly assistance, encourage them to find new jobs, side effects or further education. You can also help with a fixed repayment agreement as a loan.
According to Savings.com, 77% of financial support parents have specific conditions for monthly payments.
Finally, you can also set the help of age limits. It seems reasonable to cut off a 25- or 30-year-old, and time limits can encourage your child to arrange their financial independence.
Savings.com found that while 18% of parents want to continue to raise their adult children permanently, most people want to be weaned in four years or less.
Setting boundaries may require uncomfortable discussions with your child. However, if you don’t want your financial security plan to harm your relationships, managing expectations is crucial.
This article provides information only and should not be construed as advice. It is without any warranty of any kind.