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3 Signs You're Sacrificing Your Financial Security for the Sake of Your Kids


When you’ve worked hard all of your life, you deserve to reach a point where you feel secure with your personal finances. But providing too much financial support to grown children could make it so you’re unable to get to that place.

Data from Savings.com reveals that 58% of parents agree they’ve sacrificed their own financial security for the sake of their adult children. And here are three signs that you’re at risk of doing the same.

1. You’re giving your adult children money instead of saving for retirement

Maybe you earn a higher salary. You earn enough money to not only cover your bills, but max out your IRA or 401(k) plan contributions and still have a good chunk of cash left over.

If that’s the boat you’re in, then sure, why not help your grown kids out with bills? But if you’re giving your grown kids money instead of making retirement plan contributions, or bigger ones, that may be a problem.

The reality is that if your grown kids have taken on expenses they can’t afford, the solution should be for them to scale back and get on a budget — not for you to compromise your retirement. That’s not fair to you.

Have an honest conversation if you’re providing financial support and are shorting your retirement savings because of it. It may be that your kids would be horrified to hear that you’re doing this and would encourage you to put your own needs first.

2. You’re pulling money out of your retirement savings to give to your grown kids

You may be of an age where you can take withdrawals from your retirement accounts penalty free (that age starts at 59 1/2). But any dollar you remove from your IRA or 401(k) early is a dollar you won’t have to spend later in life.

Plus, if you’re still planning to work for a few more years, you could also miss out on some investment growth between now and retirement, albeit a modest amount. If your nest egg generates a relatively conservative 6% return because you’ve shifted to safer investments, and you remove $5,000 six years ahead of retirement, you’ll actually end up missing out on $7,000. And again, while that’s not an earth-shattering amount of lost gains, it’s $2,000 — a sum that could pay for a home or car repair during your retirement.

Of course, if a grown child of yours is really in a jam and you take a one-time IRA withdrawal to help out, that may not be so terrible if, say, your balance falls from $950,000 to $947,000. That’s still a decent amount of money you’ve got there, and you may still have time to add to it. But if you find that you’re frequently tapping your retirement savings to help your kids, you should know that you may be risking a shortfall.

3. You’re compromising your earnings potential to help your grown kids

Maybe you’ve been cutting your hours at work so you can help your kids with child care — as in, be the person who gets the grandkids off of the school bus so their parents can work full-time. But if you’re in your peak earning years, you probably shouldn’t be compromising your job to do that.

Of course, if your job is flexible and you’re able to help, great. But otherwise, before you risk compromising your earnings to provide support in the form of child care, have your children do some research. It may be that through their town’s social media page or other connections, they can find a local high school or college student who charges a reasonable hourly rate to serve as an after-school babysitter. And that way, everyone can continue to work full-time and maintain their income.

It’s definitely a nice thing to want to help your grown kids as much as possible. But if these signs apply to you, it means you may be sacrificing your own financial security. And that’s a dangerous thing to do.

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