Most parents would agree that there is nothing more important in life than family. As such, it is not surprising that many parents put their children's needs above their own, including financially. While this selflessness is admirable, it can actually have a negative impact on the family in the long run. Without adequate financial planning, parents can find themselves struggling to make ends meet, which can lead to stress and familial conflict. Of course, making sure your children are fed, sheltered, and cared for is one thing, but footing the bill for their lifestyle is another. While we encourage parents to give their children the best possible start in life, it's also important to ensure that they are not sacrificing their own financial security—and retirement planning in particular—in the process.
If you have concerns about putting money away for retirement while fully providing for your family, you're not alone. Let's explore how parents can remain intentional about providing for their children without sacrificing their retirement savings.
Is It Financial Support or Unnecessary Funding?
There is a major difference between being financially supportive and funding the lifestyle your child wants as an adult. As mentioned, chipping in for your child's education or helping them reach their potential is one thing, but paying for things like gym memberships, recurring car maintenance costs, or rent is something else entirely. As a parent, it is your prerogative to instill financial independence in your children. Instead of handing over money every time they need it, give them the tools to be financially responsible on their own. A couple-hundred-dollar handout might provide some instant gratification, but giving them the tools to build wealth on their own is the gift that keeps on giving.
Draw the Line
As a parent, it can be hard to say no to your children, but it's important to learn when to draw the line. Consider the long-term implications of picking up the tab whenever your kids need money. That’s not to say that if you have the resources, you should never help them financially. However, there should be clear boundaries. Your kids shouldn't be reliant on you whenever they find themselves facing a financial obstacle. Always remember to put your own financial future ahead of unnecessary expenses.
Prioritize Your Retirement
Retirement is the largest financial goal that most people will ever set for themselves. And it's not surprising, given that retirees will likely need enough savings to sustain their lifestyle for 20+ years. Unfortunately, between inflation and increased longevity, the cost of retirement is only going up. This means that adults need to be strategic with their planning. Bailing children out of short-term debt, co-signing loans, funding their weddings, chipping in when their cars break down...we understand that these actions come from a place of love, but if they run the risk of setting your retirement back, they are simply not worth it.
Plan with a Professional
Luckily, with the proper planning, there are ways to both save for your dream retirement and give intentionally to your children. For starters, start saving early. If you begin saving when your children are young, you'll have more time to let your money grow. If you desire to help your children pay for higher education, take advantage of tax-advantaged accounts, such as 529 plans. These accounts grow tax-free, which means more of your money can go toward helping your children. And don't underestimate the importance of working with a professional. From acting as a sounding board to steering you in the right direction along your financial journey, working with a financial planner is an invaluable resource.
At Triada, your desire to provide the best of the best for your kids truly resonates with us. On the other hand, we have seen firsthand the problems that can arise from poor retirement planning. We believe that the right financial roadmap can help you chart a course between where you are today and where you want to be tomorrow. Learn more about our solutions and get started with us today!