Many people enter retirement with sufficient assets, but they run out of money during retirement. A major cause of the shortfall is providing too much help to the children and grandchildren, becoming the Bank of Mom & Dad. This article discusses the problem and gives some ways to avoid falling into this trap.
Two-thirds of 50+ parents have financially supported a child 21 or older over the past five years, according to research from Merrill Lynch and Age Wave. The average amount provided in a one-year period: $6,800. If instead you saved that much cash every year in a tax-deferred account averaging 6% annual gains, you’d have close to $100,000 more for retirement within a decade.
I could certainly use an extra 100 grand by the time I retire. How about you?
What bothers me most, though, is the niggling concern that I might be crossing the line between helping my kids and hobbling them on the path to full-fledged adulthood.