Helping Your Kids Without Hurting Your Retirement

If you’re a parent, there’s a good chance you’ve already dipped into your wallet to help your adult kids – maybe more than once.

You’re not alone. Studies show that 75% of parents with at least one adult child are still providing financial support. And that help averages about $7,000 a year. Now add in the fact that more people are having kids later in life. The result is a growing number of parents who are trying to support children at the same time they’re trying to plan for retirement.

It’s a tough balancing act, one I help clients navigate all the time. So, here’s my take on how to support your children without putting your own future at risk.

First, ask: What is the money really for?

Before writing a check, step back and ask: Is this truly helping them in the long run? Or is it just a temporary fix? Or worse, enabling a cycle that could continue?

Sometimes helping is necessary and appropriate. Emergencies happen. But if you find yourself bailing your kids out on a regular basis, it’s time to hit pause. You’re not being selfish. You’re being strategic.

One of the hardest things to do as a parent is let your kids struggle or fail. But here’s the truth: we grow the most through struggle. If we never face discomfort, we never build the muscles – financially or emotionally – to stand on our own.

So sometimes, the best gift you can give your kids isn’t money. It’s the opportunity to figure things out.

Don’t just give, structure the support

When financial help is appropriate, try to structure it in a way that teaches and empowers.

Let’s say your child’s car breaks down and they need $1,000 to fix it. Instead of just handing them the money, consider making them part of the solution. Can they cover a portion? Can they take the bus for a while or carpool with you and contribute gas money?

Having some skin in the game makes the support more meaningful and more likely to spark lasting responsibility.

You can also get creative. If your adult child lives at home, ask them to pay a modest rent –not to profit from them, but to set aside that money as a nest egg for when they move out. They learn how to budget and contribute, and you give them a financial leg up when they’re ready.

Use this as a financial teaching moment

These situations are golden opportunities to teach your kids important financial lessons, which too often get missed.

Here’s a list of a few things worth talking to them about:

• The importance of having an emergency fund (3-6 months’ worth of expenses)
• How to budget and track expenses
• The difference between needs and wants
• Why living within your means isn’t just smart, it’s freedom

When your child is young, these lessons are invaluable. When they’re older and asking for money? They’re essential.

Be honest about what you can afford

The reality is, you can borrow for college, but you can’t borrow for retirement.

I’ve seen families put their own long-term security at risk out of love and a desire to help. But if you drain your retirement accounts, take on debt or delay your retirement to help your kids, what happens when you need help down the road?

Therefore, your retirement always comes first.

Before giving, do a gut check and a numbers check. What’s your retirement income plan? What will you need for healthcare and long-term care? Can your budget truly absorb the support without derailing your goals?

You don’t need to figure this out alone. That’s what financial planning is for.

Set expectations and boundaries

If you do decide to help your child financially, communicate clearly. These are the boundaries you need to establish:

• Is this a one-time gift or a loan?
• Will it be repaid? If so, when?
• What will be different next time?

Don’t assume they know it’s a one-off. Be honest. “I’m here for you, but I also need to make sure I’m taking care of my own well-being along the way.”

That’s not just responsible. It models the kind of healthy financial boundaries you want them to build in their own lives.

The bottom line

You want to help your kids. I get it. So do I.

But helping them shouldn’t come at the expense of your future. With the right conversations, structure and planning, you can support your children in a way that strengthens everyone – not just for today, but for the years ahead.

Need help finding the right balance?
That’s what I’m here for. At Advance Capital Management, we help families like yours to build financial plans tailored to their lives – whether they’re planning for college, retirement or something in between.

Let’s talk about how to make it work for your kids, and for you.