How to Not Have your Adult Kids Ruin your Retirement


According to research carried out by Age Wave and Merrill Lynch, more than 65% of parents over the age of 50 have financially supported their kids aged 21 or older in the past five years. Amounts paid out to support these over 21s have averaged at $6,800 per year, which, if saved in a tax-deferred account that provided an average annual return of 6%, would have amounted to almost $100,000 extra that those parents could have saved towards retirement.


Cut the Extras

If there’s a valid reason why your adult kids can’t fully support themselves yet, helping them to cover basic rent and utilities is acceptable – for instance, if they are contributing everything they possibly can or struggling to make ends meet because of not being able to secure employment that pays a livable wage or they are having difficulty repaying student loans. However, funding a fancy apartment or regular dining out at expensive restaurants will not help them learn to support themselves at all in the long run.


Initiate an Appropriate System

A survey conducted by the BMO Wealth Institute revealed that just over 65% of parents give financial assistance to their adult kids as needed, such as at times when there are insufficient funds to cover an emergency or if their kids are short on funds to cover a regular bill.

Instead, it is recommended that you calculate ahead of time how much your child will need to supplement exiting income and then automate biweekly or monthly transfers equaling that amount. From there, you should review the amount being sent after a few months and consider reducing it periodically until you reach a mutually agreed upon deadline for stopping financial support.

Setting up an arrangement like this will help simulate the scenario of receiving a regular paycheck. However, genuine emergencies may still occur at times, such as dealing with a flooded apartment. In cases like these, feel free to step in with whatever you can afford to assist with.


Move your Focus from Provider to Advisor

When the time comes to stop providing physical financial assistance to your child, this doesn’t mean that you should withdraw your advice as well. This advice can come in the form of teaching your child how to budget more effectively, discussing their options regarding healthcare insurance or giving them information regarding how they can select the best possible 401(k) options to prepare for their future.

While it is recommended that you provide your child with financial advice, it is never a good idea to nag or push too hard – this will be the fastest way for them to rebel, which could result in even worse financial decisions being made in the long term.

Another way in which you can help guide your child financially is to introduce them to budgeting apps such as Digit or Mint. Encouraging them to spend time on sites like will also provide them with a wealth of information on how they can become more financially secure and not have to rely on the Bank of Mom and Dad for constant handouts.