Retirement Wreckers

Retirement Wreckers

June 08, 2022

Children: Teach Them to Fish, so They Do Not Sink Your Boat

Children.  The lights of your life.  Your greatest (and most expensive) treasures.  As a parent, you will do most anything for your kids, wanting to grant their every wish from the moment they’re born.  It is in your nature to make them feel happy, safe and cared-for, and there are things and life lessons that you provide along the way.  Their financial impact starts innocently enough with food, toys, clothes and sports uniforms.  As they grow and enter adulthood, their expenses increase and impact your bottom line even more with big ticket items like cars, college, insurance and a first apartment.  Quickly, these larger costs can add up and make a major dent in your own budget and nest egg for future plans.  If you are not careful, your still precious, not-so-little Retirement Wreckers can alter where you find yourself in the years ahead.

One of the best life lessons a parent can impart on their kids is how to face challenges of all sorts, especially financial ones.  As your children grow, you can role model smart budgeting by not trying to “keep up with the Jones’,” enacting limits on fancy toys and vacations.  It can be hard to see your little ones go without things their friends have, (it can be hard for adults, too!), but ultimately it is better for them to learn how to make choices to live life within their means, and enjoy the benefits of not incurring high-interest debt that can take decades to pay off.  This behavior can position your children for financial independence, and helps preserve your retirement plans, too.

However, situations are not always cut and dry, especially now, with the economic fallout of COVID-19 having left many adult children with precarious financial outlooks.  In a report published on CNBC in August 2020, since the onset of the pandemic, 1 in 4 parents (or about 24 million Americans) have provided financial support to their adult children, with about 29% of the Americans surveyed noting that they now plan on retiring later than anticipated as a result of allocating their retirement resources elsewhere.  But even in healthier recent years, parents’ support of their grown children has increased significantly, in part due to rising costs of education and housing.  And while it is not necessarily a bad thing to help your children during times of need, parents may unwittingly cause negative impact to their offspring’s long-term financial health by paying for their essentials and possibly enabling them to live outside of their means.

I believe that saving for your retirement should be prioritized over financial support for your grown children.  If you are one of the many parents with adult children in need of financial support, there are strategies you can employ to help get them back on track toward fiscal independence, while safeguarding your own retirement nest egg.

  • Help your child create a budget to understand their parameters and how to live within them. Even as an adult, this is important.  And ideally, you will also want to allocate a small percentage in the budget for their retirement to get them in the habit of saving for their own futures.
  • Set limits to the financial support.  Beware not to become an interest-free credit-card for your child’s expenses- especially for extravagant purchases that are outside their means. Set limits to help them learn how to work with what they can and cannot afford.
  • Offer financial support as a loan.  The repayment can start in tiny increments, but a loan helps further your child’s sense of accomplishment and financial well-being and helps limit resentment between siblings of different circumstance.
  • Relieve financial burden without spending a dime.  There are also creative ways to free up some of your child’s expenses without affecting your savings, like watching their children while they work, or letting them live with you for less than the current market rate of rent and utilities.  While these are not long-term solutions, this type of support keeps your child in control of their financials, but in a way that is more workable for their means.

The rising cost of living means that we are all facing hard fiscal choices, and the agony of decision is made worse when a parent may have to choose between themselves and their children.  Sometimes it takes an outside resource, like a financial professional, to help families see the bigger picture and understand their current financial situation in order to help plan for their future stability. Preserving your retirement nest egg is probably more important than you may realize, and THAT is an important life lesson to impart to your children at any age.


Located in Truckee, CA, Pacific Crest Wealth Planning believes retirement & financial planning should be a highly personalized process. Effective planning may enable you to enjoy the freedom of your retirement years. Without it, it may take everything you have just to get by.  As a fiduciary, we are obligated to put our client’s interest before our own.  Please feel free to contact one of our CERTIFIED FINANCIAL PLANNER® practitioners at (530) 563-5250 or by email.

This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation.  Please consult your financial advisor prior to making financial decisions. 

John Manocchio (CA Insurance Lic#0H73423) is a Registered Representative and Investment Adviser Representative with/and offers securities and advisory services through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency.