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WSJ: “Don’t Let Grown Kids Ruin Your Retirement”

“How much are you willing to sacrifice?” Mr. Ellis recalls asking the retired couple. “Are you willing to give up your own needs?”

Mr. Ellis’s clients made the tough, and right, call. They cut off their daughter.

~from Wall Street Journal

I saw THIS article (Don’t Let Your Adult Kids Ruin Your Future) in the Wall Street Journal, and like many other financial planners I’m sure, thought immediately of a handful of clients who could have been featured.

The short article’s premise is the increasing number of near retirees who are jeopardizing their retirement security bailing their children out of “trouble.” Trouble of course is a relative term. If the adult child stands no immediate risk of going hungry and roofless (the case of most kids who live with their parents), then there really is no “trouble.”

Trouble comes from created issues. Let me give you some examples:

  • child leases a BMW, and can’t afford the payments. “Dad I need money or they are going to repossess my car!” Repossess sounds terrible and for someone who needs a car for work and life, this could be a challenge – say someone who supports a family of five with a job that is a 1 hour drive away. However, your son is in no real danger – his credit report probably stinks already so letting the car get repossessed and making him buy a used Ford is at minimum, more honest.
  • Child can’t make student loan payments. “They’re going to garnish my wages!” says your daughter. Your answer: “since I can’t get any rent out of you, and since I sure wish I could garnish your wages too, it looks like you’re out of luck!”
  • Adult child has too much credit card debt. “Mom, Dad, my credit is going to get ruined if they report me to the credit bureau!” Your answer: “looks like it will happen eventually anyway, since you’re 29 years old and still a bad spender, this is your best way to learn. And finally maybe they’ll be smart enough not to offer you another card.”

This of course sounds cruel, but what you may not realize is, is that your children are being cruel to you! Imagine what is your child thinking when they would rather see you go down the tubes than their credit score dinged? Really? What kind of child is that? And you’re defending that behavior?

Understand something, and this is something I have no problem telling people – you are getting closer to the time when you might not be ABLE to work anymore. Your savings (and insurance I hope) is all you got – you don’t have a backup. if you blow it all on someone who won’t learn a lesson what will you have in 10 years? You’ll have no savings, no home and maybe still have your deadbeat kids trying to siphon whatever is left.

It’s time you stood up for yourself and it’s time you taught that lesson in independence that maybe you haven’t taught yet, to your kids.

PS – interestingly, parents sometimes act like teenagers, looking for an excuse to cut kids off (I’m downsizing, moving, retiring etc) rather than just coming out and saying it. Believe me, your kids will be alright and you’ll feel better too.

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