A current trend financial advisors are seeing is retired parents supporting their adult children. The current economic and political climate may be to blame for this, but this practice does nothing for either group. Parents burn away their retirement savings and children develop a sense of entitlement and dependence. The latest surveys suggest that supporting children after retirement is a big mistake; perhaps being only better than not planning for retirement at all.
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As harsh as this sounds, parents are highly discouraged from doing so. Children -- especially those that are at a working age -- should be able to support themselves. The value of financial literacy must be emphasized. Adults need to recognize the importance of planning ahead. It is crucial, says financial advisors that retirement plans be made as early as possible. Doing so builds a safety net in which people can depend on after they no longer have a source of active income. The amount saved each month, along with how early these savings begin, determine the strength of that net. It is assumed that following these good saving habits will ensure a relatively comfortable life after retirement.
That said, there is an underlying assumption that people will use their savings wisely. This does not include supporting adult children. Using the same analogy described above, this is similar to taking a pair of scissors and cutting a hole in the net.
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| Image Source: investopedia.com |
What should be done instead is for parents to teach their children proper wealth management habits at an early age. While parents are still active in their day jobs, good financial practices should already be taught. Similar to planning for retirement, parents can prevent any headaches of supporting their children in the future.
Under extremely rare conditions, parents can help their adult children after retirement, but it is advised to put a time limit on the help.
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