Parent's Retirement vs. Helping Children

Both Ross and I have witnessed the dilemma of parents watch their kids in trouble or adding to student debt and wanting to help. Usually parents step in with both feet to correct it but find, or ignore, the problems they may be facing themselves. A common examples is commitments made to the first born and then having to carry that commitment to all the rest even if it destroys their own hopes for a better retirement.

For example Ross had a client while their son was avoiding bankruptcy by getting cash from his parents. “Let the child go bankrupt and then help him out” was the advice. But loving parents can’t face the reality and carries on until they are broke. Once the parents ran out of cash the son went bankrupt. Unfortunately the parents could no longer help because they too were without any funds. Both retired they had no way to generate more funds unless they returned to the work force.

Planning and forecasting can help understand your needs and the needs of your children. Without a plan to tackle this and an understanding of your limits on generosity you most likely will give more than you may realize. I recognize there are examples of situations you cannot avoid especially when it comes to the health and safety of your children. But even these periods of stress require planning to reduce the aftershock to your financial position.

When it comes to kids, parents want the best for them but parents need to give only what they can afford for all their kids. Sure there are perfect ideas to have the kids graduate without debt but a good compromise is to have the kids graduate with some but not all debt.

The consequence is you may have to ask the kids for a refund of your generosity or move in with them. If you put it that way you may finds they are happy with whatever you can afford.

If you have any questions, comments, or suggestions for future articles please email.

Jonathan Taylor
Chartered Financial Planner

6851 Morrison Street
Niagara Falls, Ontario  L2E 2G5
905 374 9550 or 1-877-325-7677