5 Expenses Retirees Should Stop Paying for Their Kids
Let’s imagine that your kids are grown, but you’re still paying their bills. Now let’s say you’re retired and living on a fixed income — so this is putting a major strain on your finances.
“As a mom, I completely understand why parents want to support their children into adulthood and help them navigate all of the challenges that come with it,” said Lena Haas, head of wealth management advice and solutions at Edward Jones. “At the same time, I see how crucial it is for children to achieve their own financial independence as they enter adulthood.”
Since today’s young adults are facing many financial challenges — such as inflation, unpredictable housing costs and persistent student debt — she said it isn’t surprising that parents are still lending them financial support.
“But as today’s retirees are experiencing greater longevity and require more savings to enable a comfortable, secure and possibly lengthy retirement, limiting financial support for adult children is a crucial choice,” she said.
This is important to protect your financial security, which can allow you to avoid becoming a burden on your adult children further into retirement. “There is no one-size-fits-all approach here,” she said. “What is important is to come up with a plan and have a transparent conversation as a family — ideally well in advance.”
When deciding whether a specific expense is worth continuing to pay for them, she said to consider if it will help them in the long run or actually be a disservice that doesn’t cultivate smart saving strategies. “You can continue to support your child emotionally and offer to help them strategize ways to navigate their finances, without jeopardizing your own financial future.”
5 Living Expenses To Stop Paying for Your Adult Children
Still not sure which expenses you should no longer be paying for your adult children? Generally speaking, Dennis Shirshikov, head of growth at Awning.com and an adjunct professor of finance, economics, and accounting at the City University of New York, said these five bills need to be shifted to them ASAP if you’re still footing the bill.
Student Loans
“The common belief that parents need to bear the burden of their children’s education debt should be re-examined,” he said. “It’s one thing to assist with tuition and related expenses, but quite another to shoulder years of loan repayments after retirement.”
As a retiree, he said you need to prioritize ensuring your savings allow you to maintain your current standard of living and any unforeseen medical expenses.
“An anecdote I often share with my students is about a couple who ended up delaying their retirement because they chose to pay off their children’s student loans,” he said. “Their kids had stable jobs, but were still getting accustomed to managing their finances.”
Cellphone Bills
It’s convenient to add your children to your family plan, but Shirshikov said it’s time to encourage them to take financial responsibility for their own cellphone bills.
“This not only reduces monthly expenses for the retiree, but also helps young adults understand the cost of everyday utilities,” he said. “I had a client once who was shocked to realize that he was still paying for his 30-year-old son’s cellphone bill, simply because it was added to his plan years ago and never reconsidered.”
Car Payments and Insurance
If your adult child has a vehicle, he said they need to be responsible for all associated costs, as they can significantly drain your savings.
“One of my friends had been paying for his daughter’s car expenses until she turned 28,” he said. “When he eventually stopped, he was amazed at how much extra money he had every month, and he was able to put that money toward his travel goals.”
Rent or Mortgage
It’s not uncommon for retirees to allow their children to live at home rent-free or cover their mortgage payments, but he said they need to understand housing costs.
“A client of mine continued to pay her son’s mortgage until her retirement savings were critically low,” she said. “Eventually, her son took over the mortgage payments, realizing the financial strain his mother was under.”
Groceries and Household Supplies
If your adult children live at home, Shirshikov said they need to contribute to grocery bills and household supplies. “I remember a retiree who was surprised to find out how much she could save when her adult children started contributing to the groceries,” he said. “This seemingly minor expense can add up over time.”
Ultimately, there is nothing wrong with helping your kids, but providing assistance beyond a certain point isn’t actually doing them any favors, said James V. Grace, CFP, director of wealth management at Silver Pine Capital, LLC.
“Kids need to learn how to budget and manage their own finances and make tough choices about how to spend their money,” he said. “If mom and dad continue to pay for everything, the child is never truly 100% responsible for their own lives.”
He said it’s OK to tell your kids that you love them, but you’re retired now, so it’s time they took care of themselves. Let them know you’ll continue to support them in other ways, but can no longer pay their bills.
These conversations might feel difficult to have. However, he said you need to think about the negative financial impact to your retirement funds over time, caused by continuing to carry your adult children’s living expenses.
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