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Old 04-24-2019, 09:13 AM
 
Location: Central Ohio
10,824 posts, read 14,901,780 times
Reputation: 16537

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Adult children are costing many parents their retirement savings

Quote:
Financial independence, once a hallmark of adulthood, has gone by the wayside as adult children increasingly depend on their parents to help them cover the cost of rent, student loans, health insurance and more. But parents' desire to give their children a financial assist could be misguided -- and even backfire in the long run.
#1 Why is it some parents have the belief they owe their child a college education? I just don't get it.

If you can pay for it then pay for it but it is not owed... after graduation from high school they are ADULTS and can pay their own way which includes college.

Signing a student loan? Are you nuts? As I understand it a federally insured student loan is one of the very, very few things the government can take from your social security benefit which is crazy.

I was a real hard ass in raising my kids. I paid for college because I was able to but before I did they had to clear their major with me and convince me they could earn a free and independent living with their degree so once graduated I would no longer have any reason to support them.

Upon graduation from high school I purchased them a new car with the understanding that as long as they were in college FULL TIME without any breaks I would pay the monthly payment, the insurance and give them a gas credit card with the full understanding that if they quit school, or even took a "break", the car would be totally their responsibility. I would get my gas credit card back, stop insurance payments and if they couldn't make the car payments I would sell the car from under them.

They knew their dad over the years and they knew what I said I meant... there was no misunderstanding.

Like I said I was a real hard ass and meant every word I said.

Upon graduation from college I would sign the car over to them.... basically they would leave college with very little debt and a fully paid for reasonably new car.

A little college debt... I made them take a $1,250 loan for every semester so they would leave college with a $10,000 debt because I wanted them to have skin in the game. Poor babies!

They had jobs before they graduated but the rule was they had 30 days after graduation to find a job and be out of the house. I raised my children to be independent and that meant not living at home.

Why would a parent jeopardize their retirement for their blood sucking kids is beyond me. The secret here is to raise your kids not to be blood suckers by laying out all the rules early, clearly, repeat often and always mean exactly what you say and back it up. Never an empty threat.

If you are a dad you are not their best friend. Kids will have best friends their entire lives but they have only one dad so act like it.

These kinds of articles really tick me off because it isn't the kids it's the stupid parents that made them that way!
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Old 04-24-2019, 09:33 AM
 
Location: TN/NC
34,944 posts, read 31,087,664 times
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I get both sides of this.

My uncle is 63 and is still supporting his 24 year old daughter who lives about three hours away and works in HR, but doesn't make a lot of money, as well as his 20 year old daughter and that daughter's girlfriend to an extent. He's affluent and can afford it, but I know a lot of parents in that situation that aren't as fortunate.

But parents don't necessarily need to provide cash to assist their kids. Back in 2016, I was living in Indiana and had run up my credit cards - I was hoarding cash because my job was shaky. I ended up getting a job back in Tennessee. I stayed with my parents for awhile to get the bills paid down. I paid a third of everything, plus my own food and consumables. They weren't out much of anything by me just being there, but I was able to save at least several hundred a month. Dad's job was shaky later on and I helped them out more.

Most of my friends have kids, and their parents, many already or close to retirement, pitch in with things like watching the kids or even making meals and such. When I was little, I often stayed with my grandparents and was never in daycare. Memaw would often make a dinner for us.
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Old 04-24-2019, 09:54 AM
 
Location: Reno, NV
5,987 posts, read 10,451,393 times
Reputation: 10809
I agree with the OP.

We have friends who still support or subsidize their 40-something kids! They are endangering their retirement for entitled and ungrateful adults, but they continue to do so even after vowing to stop.

I can understand an emergency or temporary help, and depending on the circumstances I might not even ask to be paid back (if I can afford it). But an ongoing thing? No! Providing them with a credit card? Hell, no! But this is what our friends are doing, and it is upsetting to watch it happen.
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Old 04-24-2019, 09:54 AM
 
Location: S-E Michigan
4,268 posts, read 5,913,835 times
Reputation: 10802
I grew up in a household where Mom always told us, "You can stay as long as you want after graduation (which we assumed meant college) but you WILL pay Room & Board". I took her at her word and bought my first home a few weeks before college graduation as I already had an employment letter from my first job.

Neither Sister moved out immediately. Neither Sister paid any Room & Board - that I know of.

My wife and I paid for our sons' undergrad degrees as it was important to both of us, and we had saved for many years in anticipation of these costs. Both boys were told they would need to pay for their own graduate degrees and we told them ways this could be done at no or little cost to them. We didn't pay any direct costs for their Grad School, one son is a Lawyer and the other son a MD. ( I classify clothing, trips to the grocery store when visiting them, air fare or a gasoline card for a holiday trip home, new tires, etc. as indirect costs, and far cheaper than their school costs!)

Both boys bought their first new cars with their own money although I did a lot of free D-I-Y maintenance as their vehicles aged to save them money.

Taking out a Parent Loan for your child's education is a horrible idea. The parents who are doing this are almost always risking their own retirement as they are likely entering or approaching their early 50's where they may find themselves a victim of an unannounced Reduction In Force at their employer.

My wife has a co-worker whose daughter is graduating HS in another month. The daughter applied to only one school, a State supported school, and received zero financial aid. The daughter will be taking out the Federal maximum limit of ~$27K in loans during her 4 years of studies, Mom & Dad are facing the prospect of taking out an additional ~$100K in loans to pay for the remainder of their daughter's college years. Apparently they never planned or saved for college costs.

Last edited by MI-Roger; 04-24-2019 at 10:08 AM..
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Old 04-24-2019, 10:09 AM
 
3,014 posts, read 2,219,022 times
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What many don't realize is that if parents support their adult children, more than likely the children will end up financially supporting their elderly parents later on.
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Old 04-24-2019, 10:11 AM
 
Location: SoCal
20,160 posts, read 12,715,855 times
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I raised my children to be independent, but I was not as hard ass. But I ran the household as if I were in the military, I was always the general. Yeah of my household. But a nice general. And don’t kid yourself otherwise.

Last edited by NewbieHere; 04-24-2019 at 11:26 AM..
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Old 04-24-2019, 10:40 AM
 
Location: Redwood City, CA
15,246 posts, read 12,891,901 times
Reputation: 54028
Quote:
Originally Posted by gus2 View Post
What many don't realize is that if parents support their adult children, more than likely the children will end up financially supporting their elderly parents later on.
Will they, though?

While there may be isolated instances of this, it seems very unlikely that adult children who've had everything they asked for handed to them would be careful stewards of money, diligent enough to have a sufficient amount stashed away to support aging parents.

I once asked my parents for money: $300 for a wedding. They complained but sent it. Years later, my mother asked me for money. I sent her $300.
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Old 04-24-2019, 10:52 AM
 
Location: planet earth
8,620 posts, read 5,621,306 times
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I don't understand why the federal student loan application REQUIRES the parent's financial info. If the applicant is an adult, how is this legal?
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Old 04-24-2019, 10:55 AM
 
Location: 89052 & 75206
8,103 posts, read 8,286,045 times
Reputation: 19902
I don’t think the OP is a hard a$$. He set reasonable expectations. I did the same. My kid dropped out of college and moved in with a girlfriend. He never asked me for a penny at that time, knowing well what my response would have been. He subsequently finished school without my financial help. Years later, married and with a kid, he asked me for a loan for dental work. I lent him the money and he paid it back. Then about 5 years later, I gave him a mortgage for his house. He paid it off in 10 years.

Yes, I have helped him but my own parents did the same with me and I was never overly dependent on them; he is not on me.

Recently he asked me for another loan for his business. He is creditworthy and can get money from a lender. I said no and he cheerfully accepted my response.
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Old 04-24-2019, 11:08 AM
 
4,717 posts, read 3,252,640 times
Reputation: 12122
Quote:
Originally Posted by MI-Roger View Post
Taking out a Parent Loan for your child's education is a horrible idea. The parents who are doing this are almost always risking their own retirement as they are likely entering or approaching their early 50's where they may find themselves a victim of an unannounced Reduction In Force at their employer.

My wife has a co-worker whose daughter is graduating HS in another month. The daughter applied to only one school, a State supported school, and received zero financial aid. The daughter will be taking out the Federal maximum limit of ~$27K in loans during her 4 years of studies, Mom & Dad are facing the prospect of taking out an additional ~$100K in loans to pay for the remainder of their daughter's college years. Apparently they never planned or saved for college costs.
I agree. My parents put all 5 of us through undergrad, back in the 1970s when it was more manageable. They also helped my sister and BIL through the years when my sister was in Med school; she'd started when she was 31 and they had 3 kids and BIL was holding down 2 and 3 jobs at a time to try and pay the bills. I had only one child and it was VERY important for me to continue this so I also paid for his degree. If it had been necessary for him to start at the local community college and then commute to the well-respected state university an hour away, I would have encouraged that rather than a giant loan burden. (DS had the advantage of a mother who understands how compound interest works.)

DS never asked for a dime after that till he asked (10+ years later) if I'd help when they bought a bigger house (LCOL area, they were already outgrowing the "starter house" and had a 3rd child on the way). He wanted $7-$10K, was open to a loan, but I write him a check for $10K as a gift.

I've told DS and DDIL my top financial priority is not outliving my savings. My second is helping with my grandchildren's college educations and I've already got a decent start on their 529s. The third is leaving them something. They're fine with that.
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