The theme this week on the Retirement Quick Tips Podcast is: How To Stop Financially Supporting Your Adult Children. 

All this week, I’ve been talking about how financially supporting adult children is likely to be hurting your finances and your retirement security, and how common it is that you have a boomerang child of your own that you’re financially supporting. 

I want to transition today into talking about strategies for having an honest conversation with your children and setting expectations so they can become financially independent. 

First of all, it’s important to note that there is a big disconnect between the perceptions of your finances and your actual finances. A Pew Research study found that 72% of kids who moved home believe their parents can financially support them, yet just 21% of parents agree.

So the first step is to just talk with your kids and begin to set some boundaries. For example, let’s say you have a child living at home rent-free who is working part-time. You are also paying for most of his or her bills and they’re still on your health insurance plan. 

Start by reminding yourself that you should not feel guilty about setting boundaries and expectations. And what are those boundaries? It’s reasonable to expect your adult child to pay for most or all of their own expenses and contribute to the household by paying rent if they’re living with you. This will ensure that they’re incentivized to work and find meaningful employment and a career of their own. Making it too easy for children to live comfortably with you will not help them learn to manage their own money or be financially independent in the long-run.

Secondly, it’s important to calculate how much you can afford to help out your adult child. Many parents help out their adult children in substantial ways. Let’s say you’re paying an extra $1000/month to support your adult child. That’s $12,000 a year that you’re not saving for retirement in the last few critical years before retirement.If you’re compromising your own retirement security to financially support your adult children, are they going to be able to take care of you in the future the way you are taking care of them now?  

Another useful tip, other than just having frank conversations with your kids and setting expectations is to get to the root of the problem. 

Does your adult child have a crushing debt load? Is finding affordable housing the issue? Are they having trouble finding a job? If you can address the real issue rather than putting a bandaid on the problem by financially supporting them in their current situation, you can help them out of their problem and get them to a place of financial independence much sooner. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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