Spoiling kids - and your retirement

Kids. They are literally part of you. You are as emotionally connected to them as you are to anyone or anything. Their well-being is so important that you would give your life in their defense. But today I want to discuss a bit about where your responsibility ends, and theirs should begin. Let’s talk about your kids and your wealth.

Early in my career, a very nice lady was a client of mine. She had a small pension, Social Security benefits and a decent-sized 401(k). She also had a daughter. A very needy daughter.

It seemed that every couple of months, this daughter had a problem. She couldn’t pay a dental bill. Her car would break down. The plumbing needed fixing.  And each time Mom took a little out of her savings to help her out.

Within three years my client’s nest-egg was no more. The plans to fix up her place never materialized. The trips she wanted to take didn’t happen. And if her car needed fixing, or she needed dental work, or her pipes started to leak—what was she to do? Turn to her daughter?

Unfortunately, that is not an isolated case. In fact I’m betting you know someone this has happened to—someone who equated loving their kids with bailing them out of life’s situations.

Now I’m not saying you shouldn’t help your children. If their circumstances came about through no fault of their own, if life has handed them tough breaks and your helping hand will bring them back up, then supporting them is not misguided, it’s compassionate. However, this isn’t what’s happening. More often, 70-somethings are treating their 50-something children like whiny, spoiled brats in the candy aisle. Parents give in just to shut the “kids” up.

Sometimes it’s worse than whining. The child threatens to cut off the parent from their grandchildren, not visit during the holidays (or ever), or to become violent. Situations like that require intervention by friends and family, counselors, or even law enforcement.

In any case, many parents are putting their own financial security in jeopardy for a child with chronic financial problems. If you find your adult child coming back to the financial trough time and time again, ask yourself how much you are truly helping them. Don’t stop there. Consider how much you are hurting yourself.

With so few people actually knowing whether or not their retirement savings is enough to cover their spending needs for the rest of their lives, it is relatively easy to give away more than you can actually afford. After all, you may think you aren’t going to need the money that much longer. Surprise! The rest of your life may be a lot longer than you think.  So if it seems that family visits are more often becoming money transfer events, do yourself a favor and run the numbers.

Then do your kids a favor. Don’t parent the easy way. Going down the candy aisle and buying them a treat is a nice thing—caving in to tantrums is not.

This article was published in the Wichita Falls Times Record News on July 29, 2011.