Dependent Adult Children Can Destroy Your Retirement - Five Financial Keys to Fatherhood, Not Friendship

By: Dennis_Miller

My oldest grandson, Justin, has cerebral palsy. When he was in middle school, my daughter and her husband invited me to attend a parent-teacher conference. Justin’s teacher told us that one of his classmates had announced to the whole class that, according to his mother, all of the kids would be moved along no matter what.

These were special needs students, and she shared her frustration that most of the kids simply stopped doing their homework.

I took out my business card and wrote my home phone number on the back. I told her that if Justin wasn’t working to the best of his abilities, to call his parents. If the problem continued, she could call me. Then I told my grandson I never wanted to hear from her.

To his credit, Justin graduated from college, earned a master’s degree, and now works as an accountant. He heard the message.

Dropping the Ball

Everywhere I look, I see signs that parents are screwing up their most important job: raising self-sufficient adults.

• Only 39% of incoming college freshmen graduate within four years.
• 50% of recent US college graduates report accepting financial help from family, although half of these new graduates have full-time jobs, per the ongoing study, Arizona Pathways to Life Success for University Students.
• In the US, 14% of adults ages 24-34 live at home with their parents, according to Gallup.

These are bleak statistics, but instead of dwelling on failure, I prefer to focus on the key practices of parents who are getting it right.

Key #1—Set expectations early. When baby boomers were growing up, they were expected to go to college and then move out on their own. Mom and Dad made that crystal clear by about fifth grade and helped their kids prepare. If you want Junior to move out and stay out, make that expectation explicit, and help him set and meet realistic goals for making that happen.

Key #2—Make independence the goal. We’d all like to go through life with the privileges of adulthood but the responsibilities of children. As sociologists Allan Schnaiberg and Sheldon Goldenberg have pointed out, the benefits young adults from middle-class professional families enjoy often make independence less appealing than extended adolescence. Parents need to make independence the more attractive choice.

We all know parents who help with rent or car payments for their adult children. In one such case, the young guy confided to me that he and two buddies split the cost of season tickets to the local NHL team. I shook my head in amazement. The longer parents support that kind of behavior, the harder it is to wean kids off the dole.

Key #3—Teach good financial habits early. A friend shared a creative money teaching moment with me. When he and his wife took their three young kids on long car trips, he would give each child $5 every morning. The rules were clear. No one asks Mom and Dad to buy anything when they stop for gas, lunch, or at a souvenir shop. They could spend the $5 on whatever they wanted, or they could save it.

The first day, one child spent all the money, one spent half, and the other saved it all. He said the system worked like a charm. By the time the vacation was over, there were three savers in the back seat.

It’s never too early to start showing children how to earn their own way. At what point do you stop handing out no-strings attached allowances and assign chores to make them earn that money? There’s no reason a third grader can’t work around the house for his pocket money.

Key #4—Saving is a must. When your children earn money from chores or little jobs and when they receive money as gifts, help them set put a certain percentage in savings. Talk about the difference between saving to buy something and saving for college, a rainy-day fund, and long-range wealth accumulation. Help them prepare the deposit slips and review their monthly statements with them.

Key #5—Mentor. I saved my favorite for last. When my oldest daughter was in her early 30s, she had two children and a full-time job. Her youngest has some medical challenges, and they were struggling financially. She attended a personal finance class, and she and her husband added up all their debts, including credit cards. It was significant.

As she told me this, I felt a knot in my stomach. Being a Mr. Fixit, I wondered if she was going to ask for a loan. When she finished covering all the debt they’d accumulated, I took a deep breath and said, “Wow! What do you plan to do?”

In a very excited tone, she told me about the financial plan they’d put together with help from the class. It would take five years, but they could do it.

She wasn’t calling to ask for money; she was asking for advice. I thought later about what a disservice I would have done to their marriage if I had helped them financially. What would I have done to their self-esteem? Every few months she would call and announce that they’d cut up another credit card, and we would cheer.

I hear many stories about parents who want to be friends with their children. I say, give praise when they deserve it and deliver the tough messages. That’s the job of being a parent. Then, when your children become parents, you can be best friends forever.

Dependent Adult Children Can Destroy Your Retirement

Raising financially independent adults is also critical to your own financial freedom. It takes an awfully large nest egg—far larger than most people have—to subsidize two or three adult children and still retire comfortably before age 100.

At Miller’s Money we give baby boomers the tools to live their second or third act on their own terms. Every Thursday we share timely investment news, economic analysis (in plain English) and homespun wisdom in our free e-letter, Miller’s Money Weekly. Click here to start receiving your complimentary copy today.

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