Across America, parents are spending their retirement savings to pay their children’s bills. Student loans, insurance, credit cards, and healthcare costs are just some of the bills Americans are paying for their adult children. The extra burden is forcing parents to reduce their savings each month, or even dip into their nest eggs. Megan Cerullo reports at CBS News:
- Half of American parents have cut back on their retirement savings to help pay their children’s bills, a Bankrate.com study shows.
- Parents are putting their kids’ car insurance, cell phone bills, credit card debt and health care costs ahead of their own needs to grow their retirement funds.
- Kids miss out on learning to be independent. “When you write your first rent check or car loan check it feels so good to be able to face some problem and fix it for yourself,” says one expert.
Their devotion to their children is admirable, but many of these parents will be forced to work later into their retirement years, or to endure a much lower standard of living. I’ve been sounding the alarm on retirees working into their golden years, this will only make it worse. The trend of parents taking on more of their adult children’s expenses isn’t good for either of them. Cerullo continues:
Financial independence, once a hallmark of adulthood, has gone by the wayside as adult children increasingly depend on their parents to help them cover the cost of rent, student loans, health insurance and more. But parents’ desire to give their children a financial assist could be misguided — and even backfire in the long run.
Half of American parents are unable to save as much as they’d like to for retirement, and their grown offspring — whom they still count as dependents — are to blame, according to a new Bankrate.com study.
While they likely mean well, parents who support children into young adulthood often end up encumbered when they reach retirement age. They can inadvertently hamstring their kids, too.
Instead of bankrolling their grown kids’ lifestyles, parents would do well to keep an eye on their own finances while teaching their children financial independence, experts say.
Seventeen percent of the couples surveyed by Bankrate.com said that they sacrificed their own retirement savings by “a lot” to help their adult children. Another 34 percent said they’d “somewhat” sacrificed their savings plans.
Read more here.
