Social Security pays the average recipient around $22,000 a year. Now, that figure has the potential to rise over time. But either way, it’s generally not a great idea to plan to retire on Social Security alone. Rather, your goal should be to enter retirement with a nice amount of money socked away in an IRA or 401(k).
But many people struggle to build retirement savings during their careers. For some, it’s a matter of other bills, like an expensive mortgage, getting in the way. But if you’ve been shorting your retirement savings because you’ve been helping to support your adult kids financially, you’re in good company.
In a recent survey by Retirement Investments, 19% of respondents say they’ve sacrificed their retirement savings to help their children. But that’s really not a good thing at all.
Don’t neglect your savings
As a parent, it’s natural to want to help your adult kids as best as you can. And if you have plenty of money to give out, then sure, why not help them pay their bills if they’re having a hard time keeping up?
The problem, though, is that many pre-retirees need all of the help they can get when it comes to building a nest egg. And so if you’ve been sacrificing your retirement savings to give money to your grown kids, it’s time to break that cycle.
If you retire without a large enough nest egg, not only might you end up struggling financially, but you might then end up having to go to your kids for help. And that’s probably not what you want.
You can help out in non-financial ways
If your retirement nest egg needs a serious boost, then you should really get yourself on a tight budget and do what you can to carve out more room for your savings. And you should also stop handing money over to your grown kids to help them pay their bills.
That doesn’t mean you shouldn’t try to help them get on their feet financially, though. One option that may be worth considering is allowing your grown kids to live at home rent-free for a period of time. That way, they can build some savings, pay down debt they may have incurred during college, and move out once they’re settled into careers that are paying them a decent wage.
You may even want to go as far as to allow your grown kids to live at home if they’re partnered up, married, or have kids of their own. Will that be the easiest living arrangement for everyone involved? Maybe not. But it also might benefit all of you financially.
Having your grown kids under your roof might mean getting more help with home repairs and maintenance, thereby saving you money. And your kids will save money by virtue of not having to rent or own a place of their own. For a limited amount of time, it could end up being a win-win situation that allows you to focus on your retirement savings and avoid ultimately falling short.
