Failure to Launch, Part 2: When Helping Your Adult Kids Hurts You
Do you have an adult kid living in your home? Or perhaps you’ve been helping your adult child by paying down their school loans, making their house down payment, or covering their car insurance or cellphone bills?
In Part 1 of our “Failure to Launch” series, we covered how this assistance can enable your adult son or daughter. Despite your best intentions, your adult child’s dependency on you might leave them feeling insecure and anxious since they are not keeping up with their peers. This, in turn, can lead to low self-esteem and depression as they increasingly lack the skills to make their way in the world.
The longer this persists, the more desperate they—and you—can feel. Your kid could end up afraid to ever enter the world and worried you’ll cut them off. Meanwhile, you’re afraid that you won’t be able to retire because your continued assistance has drained your finances.
If you are financially supporting an adult child, read our first article for insights on when it’s OK and not OK to help an adult child. Then read this article to learn how “failure to launch” syndrome can hurt your future and get steps to regain your financial autonomy.
“Failure to Launch” Can Imperil Your Retirement
As a parent, you want to help your children, but when does this generosity harm you?
We think it’s harmful whenever you endanger your financial future. For instance, you might cash out a retirement account to help with your adult child’s house down payment. Or you might continually siphon your contributions away from your IRA to float your adult child’s living expenses.
In either case, you put your retirement on the back burner, and the results can be dismal. You might not be able to live your desired lifestyle when you retire, you might have to scrimp to get by, or you might not even be able to retire at all.
When it comes to retirement, your 401(k), IRA, etc., need time for your earnings to grow. If you stop contributing “for now” so you can help your child, you can’t really make up for the lost time. And if you make withdrawals or liquidate your accounts completely, you face taxes and penalties, further hurting your financial situation.
While you will likely be on a fixed income in retirement, contending with stressors like inflation, your adult child has the potential for income growth. As a parent, you can help stabilize your future and encourage your child to live up to their potential by helping only when appropriate.
By “appropriate,” we mean that you fully meet your retirement goals. Any assistance comes from your extra cash and does not jeopardize your retirement.
Steps to Putting Your Retirement First
Understanding your financial picture can help you make important decisions about supporting your children. Consider sitting down with a financial advisor who can show you where you are on the path to retirement. They can assess the retirement lifestyle you can expect based on your trajectory and help you visualize the impact of continued “child care” on your retirement.
The results may be sobering but can also provide the impetus for implementing financial boundaries with your kid.
Speaking of boundaries, you may find working with a therapist or counselor helpful. Your counselor can help you understand the limits you want to implement and how to communicate them both firmly and lovingly.
When you communicate your decision to your adult daughter or son, don’t be afraid to lean on your advisor, counselor, and empathetic family members and friends for support.
Final Thoughts
You don’t need to feel guilty about putting your retirement first. Your retirement savings have to sustain you for the rest of your life. And unlike your child’s school or home loan, you cannot borrow money for retirement.
Take time to get a clear picture of your financial standing and decide what assistance you’re willing to provide to your adult child. By creating financial boundaries, you don’t just help yourself. You help your adult child to become financially independent, just like you had to. This is one of the greatest gifts you can give them.
Check out Part 1 for more information on how “Failure to Launch” can keep your kids dependent on you long after they leave childhood.
Our Greenwood Village, CO fiduciary financial planning firm help clients determine how to appropriately help their adult children without sacrificing their retirement. We offer a complimentary 15-minute call to discuss your financial concerns and share how we may be able to help.
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