A reader writes: “My parents helped me pay for college, but now I’m out on my own and they’re still supporting me. Should I keep accepting money from them?”
Independence is empowering.
There’s value in taking care of yourself: You’ll have the means — and perhaps the confidence — to handle life’s inevitable hiccups, rather than relying on others to bail you out.
After all, your parents may not have the cash to help if they need to focus on their own financial security instead.
Many young adults aren’t financially independent yet: 61 percent of U.S. parents with adult children assisted their kids financially in the prior 12 months, a 2015 Pew Research Center study found.
But that doesn’t mean accepting help is always the right financial move for either of you.
- Financial independence will empower you
In the short term, getting help with a cellphone bill or car payment might take the pressure off as your post-college life takes shape. But you won’t get the chance to build crucial budgeting and accountability muscles. You also won’t get the deep satisfaction that self-sufficiency brings, which parents may have to remember, too.
“It’s hard to see your child struggle,” says Andrew Rafal, president of Bayntree Wealth Advisors in Scottsdale, Arizona. “But in some cases, by enabling and providing, it can be a detriment to them.”
Parental support doesn’t have to be all or nothing; some types of assistance are worthwhile, such as education.
- Your parents should focus on retirement
In many cases, your parents may be better off keeping any extra money in their own wallets.
Families headed by a person ages 56 to 61 had a median amount of $17,000 saved for retirement in 2013, according to an Economic Policy Institute analysis of Survey of Consumer Finances data. In contrast, the average American age 65 and older — generally, those over retirement age — spent $44,664 a year in 2015, the Bureau of Labor Statistics says.
Sure, they’ll have Social Security to rely on, but it’s only meant to replace about 40 percent of your parents’ pre-retirement income each year, the Social Security Administration says.
And if they don’t have enough supplemental savings, you could end up supporting them. A third of those ages 52 to 70 said they might need their kids’ financial help in retirement, according to a recent study conducted by Merrill Lynch in partnership with Age Wave.
Your parents can use a retirement calculator to see how much they’ll need when they stop working. They can also talk to a financial planner to make sure they’re on track.
Before accepting money for a wedding, home down payment or other expense, ask your parents how supporting you will affect them, says Shelly-Ann Eweka, a Denver-based financial adviser at financial services firm TIAA. She suggests asking, “Was it part of your financial plan to help me and my siblings into our adult lives?” and “What financial goal will be affected if you help me?”