Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
Retirement generally only happens one time in our life. It is that transition period where we hope our work, parental, and personal responsibilities dissipate to the point where we only have to worry about ourselves. It is a time in our lives where we don’t have to be on a time clock, don’t have to worry about checking e-mail, and there are no meetings that we have to be at on the schedule of someone else.
Nobody really tells you what kinds of responsibilities come with having children until you actually have a child. You work hard to raise your child the right way, and you hope one day that they will be a fully self-sufficient individual. Your greatest fear may be your own children’s failure to launch. Here are four ways your children can ruin your retirement:
Their Debt Becomes Your Guilt
Many parents believe it is their responsibility to make sure their child graduates college with no debt. It becomes their own truth to the point where they sacrifice their own retirement because they want their children to have a fresh start when they get to real life.
Recently, I saw a case where parents had more than $300,000 of personal loans that they took out just to make sure their children got out college debt free. The toll that the $300,000 of debt is going to have on the parent’s retirement picture is immeasurable. In fact, it’s likely the debt will never get paid off.
Debt is one of the nagging items that can ruin any retirement. The flicker of light that you get at the time you take the loans for your children will surely be the flames of destruction for your retirement. Under no circumstances should you borrow against your retirement savings to fund your children’s college education. Nothing is owed to them but an opportunity in life.
Letting Them Get Settled Back At Home
There are a lot of parents that let their kids come back home (for a year) to help them get on their feet in real life. What’s not to like about home? The laundry gets done for the kids, there is food in the panty, and basically everything is free. It’s just like the good old days in high school where Mom and Dad paid for dinners out, the Friday night movie, and you got some side money when you asked for it.
A few years ago, NPR did a study and found out that for the first time in 130 years, more young adults live with their parents than with their partners. We aren’t quite Italy, but more and more young Americans are living at home after college and into their late 20’s due to the cost of living. The cost of living?
There is something magical about having to suffer. Knowing what it is like to have nothing, so you want to have something. Knowing what it is like to struggle. Knowing what it is like to have your back against the wall.
If you think that it’s going to end after a few years, you are wrong. We’ve noticed kids that are now in their late 40’s and 50’s who are still mooching off of Mom and Dad. A sure-fire way to ruin your retirement is to create a child who believes it is always your job to pick up the tab and give them a place to live.
The Grandchildren Guilt
What’s better than having all of the fun of the grandchildren, but not having any of the responsibility? Your kids see your face light up when you get to take care of the grandkids or get to take them out for a day.
Since your children are in the day and age where they are highly competitive with their friends, they may try to lean on you to help out with private school or help out with savings for their kids’ college.
All of this might be fine if you have the resources, but don’t for a second feel guilty that you have to take the family on a Disney Cruise or pay for a private beach house in Hawaii. It’s imperative you don’t discuss your net worth with your children because once they realize what your resources are, they will lean on you financially in ways that you may not have imagined.
Sibling vs. Sibling
Even Steven. The age-old adage that we have all heard before. You need to be extremely careful about what you give your kids along the way because if you don’t think they are keeping score than you are out of your mind. All kids keep score.
If you buy one a new car, then you’ll be guilted into buying one for the other kids. If you pay for a down payment on a new house for one of the kids, then the other siblings will expect the same from you as well.
Kids are kids and they are watching what you do all the time. Be careful about where the handouts start and stop because if you are too generous across the board, then you’ll be paying for it for the rest of retirement.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.