Are you jeopardizing retirement to help family members?
Families often pull together and help each other in tough financial times, and this is especially true following the recent recession. Millions of adults are unable to find employment, others are struggling with student loan and credit card debt and many families are having difficulty making ends meet. As a result, more individuals in a stronger financial position are using their resources to help struggling adult children or aging parents. However, some may be jeopardizing their own financial strength at the same time.
A recent study conducted by Ameriprise Financial reveals that the Boomer generation, in particular, is shelling out more money than other demographics to help out children and parents. However, some report that although they feel good in their decisions to help their family members, they may be doing so at their own expense.
According to the results, 58 percent of boomers are helping their parents in some way, with 22 percent purchasing groceries, and 15 percent paying medical expenses. Fourteen percent say they pay their parents' utility bills. A total of 93 percent of boomers polled said they provide some type of financial support for their adult children. For example, 71 percent said they cover part or all of tuition and loans, 55 percent allowed their children to move back home rent-free, 53 percent helped their kids finance a vehicle and 45 percent cover the costs of auto insurance.
However, many say that helping their family members financially has put them at a disadvantage when it comes to retirement planning. For example, 34 percent said helping their children has curbed their contributions to a retirement savings plan, and 10 percent admitted to saving less for their golden years because they are providing aid to adult parents.
"Family and personal values are important when making any kind of decision, but it can be difficult to prioritize our family members' needs against our own," said Suzanna de Baca, Ameriprise Financial wealth strategies vice president. "Unfortunately, unconditional financial support can threaten or even sabotage retirement goals and security. It's important to have open conversations with your family about your current financial situation and evaluate your ability to meet your own goals before offering any kind of support."
Boomers who are having difficulties meeting their retirement benchmarks should evaluate their financial situation and determine if they can afford to provide the same level of assistance.