Not Kidding Around About Retirement

Published on April 11, 2017

Baby boomers are risking their retirement plans by spending too much money on their adult children. As parents, everyone loves their kids and wants to help them any way they can but don’t sabotage retirement for Pete’s (or Petra’s) sake.

According to the 2016 U.S. Bureau of Labor Statistics, youth unemployment (ages 16 to 24) is at 11.5 percent. So, if you listen closely, you can hear parents around the country continuing to dole out cash to their adult children—who are using these funds to cover their expenses such as rent, cell phones, cars and leisure activities.

Get real

In addition to helping out adult children, many soon-to-be retirees are part of the sandwich generation— struggling between caring for their aging parents while helping support their own children. That said, the kids are the ones putting a bigger burden on people’s ability to save for retirement.

• According to a 2014 American Consumer Credit Counseling survey, there was a higher ratio of U.S. households (1 in 3) that provide financial assistance to adult children than support elderly parents (1 in 5).
• More than a third of adult millennials who responded to a 2014 Bank of America survey receive regular financial support from their parents.
• Plus, 1 in 5 respondents had not left the parental nest and don’t pay rent or expenses.

Interestingly, it isn’t just the unemployed or the low-paid respondents who were enjoying these parental-sponsored benefits. Respondents who earned more than $75,000 a year indicated that their parents were paying for groceries (25 percent) and clothing (21 percent).

Gift your future

Prolonged support is squeezing even affluent boomers. And, the scary part is that these parents who have been subsidizing their adult kids will be living longer with less money to last themselves into their 80s and 90s.

It’s hard to strike a balance between supporting your grown children and supporting your retirement finances, but that’s what being an adult is about. The best gift you can give yourself (and your kids) is to ensure you are able to take care of yourself in retirement and that your kids are self-sufficient.

Tough love starts with the purse strings—yours and your grown kids. Don’t kid around. Gift your future by investing in your retirement savings plan on a regular basis.

Self-direct your retirement

An even greater gift you can give yourself is to self-direct your retirement plan. Financially savvy investors who understand alternative investment options know that a self-directed IRA can be a great way to build retirement wealth more aggressively. Self-directed retirement plans allow individuals to invest in nontraditional assets that they already know and understand such as real estate, mortgages and other loans, private hedge funds, precious metals, limited partnerships, commercial paper and notes, and more. These plans enjoy the same tax advantages of their more traditional counterparts, while enabling individuals to make all their own investment decisions and control their future, today.

For information about ensuring that your retirement game plan is gear, contact Next Generation at (888) 857-8058 or Info@NextGenerationTrust.com. We do not give investment advice and strongly recommend you consult your trusted financial advisors about your Traditional or Roth IRA and your retirement investments.