Your daughter needs money for a down payment on a new house. Your son needs a loan to wipe out high-interest debt. Another child wants cash to pursue a graduate degree. As parents, it’s entirely natural to want to step in and help. But if you’re already retired, you need to think twice before opening your wallet. After all, you don’t want to jeopardize your own financial security for the sake of theirs.
In retirement, you’re living on a fixed income, which means any unplanned financial support you give your kids will come directly from your nest egg, leaving less money to fund your own lifestyle or for your estate. Even if you can comfortably afford the hit, that doesn’t automatically make it the right move. Sometimes, bailing adult children out only serves to enable bad financial habits.
“Sometimes you think you are helping them buy a house that they can’t afford, and it puts undue stress on them,” says Paul Jarvis, a wealth advisor at Prime Capital Financial. “It’s better to have an open and honest conversation about what the gift is meant to accomplish.”
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