Unfortunately, this means children are one of the biggest factors holding back the retirement plans of many parents. We’re not talking about support to school-age children here, the problem is with adult children, who aren’t growing up all that well as they struggle to pay their own way in the world.
Failure to launch
Call it what you like, but there’s no doubt this is a growing phenomenon. Some terms you might have heard related to this topic could include:
Statistics tell the story
Given the modest size of our country, relevant New Zealand data in this area is hard to come by though there’s no reason to believe our statistics would be much different to the following:
Helping adult children
It’s totally natural for parents to want their kids to get ahead, to have a better life, and it’s natural to want to rescue them when things go wrong. But when helping your adult children, you need to ensure you’re not depriving them of valuable lessons or depriving your own retirement savings fund.
Safety net or hammock?
If you have an adult child still obtaining financial assistance you probably need to seriously consider questions such as:
If you still have adult children living under your roof, they need to be paying board – and no, $50 a week doesn’t cut it – instead, respect yourself enough to charge them a reasonable sum for their living costs. Some parents may have a hard time accepting money from their children, but our advice is to take it – it’s a lesson about the costs of the real world – nothing comes free.
Obviously, there are some circumstances where children may need a safety net, but don’t let them confuse you for a hammock. Unemployed adult children need to be actively looking for work and contributing what they can to the household costs.
What to do?
One thing parents can do is fully assess their own financial status and project their financial future into retirement. Then, they can have candid conversations with their adult children about what’s possible and what’s not – as nobody should be delaying or altering their retirement plans to instead give grown-up children money.
You may also want to make an appointment with one of our financial advisers, perhaps with your grown child in tow. Such two-generation meetings are becoming increasingly common, as it can help to have a neutral third party to lay down financial guidelines for a family.
What’s more, you might also consider spending your kid’s inheritance.