A hard look at tough love and financial planning.

Source: Credit Canada

by Laurie Campbell on Thursday, April 9, 2015

Baby boomer parents take note. There’s a time for love, and there’s a time for tough love. That’s my thinking if you are currently footing the bills for able-bodied adult children who remain dependent on you to get by. You might ask, is your support encouraging your kids to become self reliant and make a life of their own, or is it merely cultivating more dependency?

“Tough love can light a fire under the butt of a rumpus room slacker. It can rouse embittered millennials to new possibilities.”

Here I’m reminded of the old saying, the road to hell is paved with good intentions. Truth is, love can sometimes be blind to behaviour that is not in a family’s best financial interest. Tough love, on the other hand, can open eyes to what benefits family finances – and family ties – most. It can light a fire under the butt of a rumpus room slacker. It can rouse jobless, embittered millennials to new explorations and possibilities. It can bring hope to any household.

If as a parent you are spending beyond your means to fulfill the extravagant wants rather than the pressing needs of your still dependent adult children, then you may require a wake up call, not to mention basic financial planning skills. Such spending can not only threaten your own longer-term financial security, it can discourage growth towards self-sufficiency in your offspring – a lose-lose situation.

“We find a couple in their mid 50s who devoted $32,000 of a meek $140,000retirement savings plan to their daughter’s wedding.”

Take a couple of examples of parental largesse as reported by Bloomberg News recently. We find a couple in their mid 50s who devoted $32,000 of a meek $140,000 retirement savings plan to their daughter’s wedding. We learn about another 50-something couple who cashed out $61,000 from their modest $200,000 nest egg to help pay for their daughter and son-in-law’s first home.

At first glance, the generosity seems admirable – how dearly the parents must love their children. But upon close review, the spending is foolish. Is this wedding tab and home payment worth about a quarter or more of mom and dad’s rather limited life savings by Canadian middle class standards?  Moreover, what is the mindset of the children who accepted such gifts given the parents’ financial status?

“Dependent adult children may need reminding that when parents with depleted savings eventually retire, the financial tables can easily turn.”

Are the parents pushovers? Are the kids spoiled? I’d say these are distinct possibilities. The importance of long-term financial planning– especially in relation to mom and dad’s retirement savings – seems to be lost on all parties.

Dependent adult children may need reminding that when overly generous parents eventually retire with depleted savings, the financial tables can easily turn. Mom and dad can become the needy ones, with calls for the children to cover living and health-related expenses that cannot be fully met for want of enough retirement income. This is a real concern in Canada today.

“Don’t abandon your kids. Just be realistic. Help your children within your means, without abandoning your own future.”

Recent studies show that a lot of Canadians are worried about their retirement nest eggs. Almost half of middle class couples believe they will not have the savings they need for their golden years. Many boomer parents believe they will have to continue to work well past retirement age in order to maintain a reasonably comfortable lifestyle.
Maybe it’s time more parents toughened up on spending involving their dependent adult children. I’m not saying abandon your kids. Just abandon overspending and stick to your savings plan. Be realistic about your finances and be firm in your resolve. Help your children only within your means. Above all, give your children the love, encouragement, and instruction they need to work toward independence.
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