“Establish boundaries and find a balance.”
Supporting adult children, however, can be a significant financial burden for parents during a period when their own retirement security is in jeopardy.
In fact, according to Savings.com, 58% of parents claimed they had foregone their own financial security in order to support their adult children, up from 37% of parents a year earlier.
Carolyn McClanahan, a certified financial planner and the founder of Life Planning Partners in Jacksonville, Florida, advised parents to “have a good financial plan for themselves, then budget how much they can give their kids.”
McClanahan, who is also a member of CNBC’s Advisor Council, advises parents to establish guidelines and a deadline before offering financial assistance, taking into consideration their own retirement plans and other financial objectives, such as debt repayment or long-term health care savings.
“You must establish limits and find a healthy balance.”
She advised saving money first for your emergency and retirement funds as a general rule.
Director of financial planning at Edelman Financial Engines Isabel Barrow counsels clients to strike a compromise: Parents will provide their children with financial support if their offspring are also making decisions that support their own financial future in other ways, like setting aside 10% of their income in a 401(k) at work.
“They can save money if they are earning money and have a job.” That must be their pledge to you, Barrow remarked.
