• 31
  • May
    2011

Last week, we reported that just under 60 percent of parents now provide some sort of financial support for their adult, non-student children. With an increase in bankruptcy among college graduates due to mounting student loan debts and a dismal job market, this has become somewhat of a necessity for many families. And while most parents are unlikely to dismiss their children's requests or need for financial help, experts say that parents who are too quick to give may end up hurting themselves in the end.

For many families, banding together during difficult financial times could bring parents and children closer together. In return for the help, approximately three-fourths of children reported contributing to household finances in some way, whether through paying part of the mortgage or rent, buying groceries, or paying other bills. Also, 40 percent stated that they help out at home in other ways, such as by cooking or cleaning.

However, these contributions may not do much for parents who are struggling themselves. Approximately 26 percent of parents who responded to the survey reported taking on additional personal debt since they began helping their children out. In addition, seven percent of respondents said that they have delayed their retirement plans, either out of necessity or choice.

Clearly, any additional expenses during this precarious financial time could do lasting damage for future retirees, especially with the current uncertainty around the Social Security program. According to Suzanne de Baca of Ameriprise Financial, parents need to ensure that they are protecting their own financial futures when they offer help to children. "If you can't take care of yourself," she said, "you won't be able to help your children in the long run."

Source: Forbes, "Nearly 60% Of Parents Provide Financial Support To Adult Children," Jenna Goudreau, 20 May 2011