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Helping Adult Children: Tired of Being the Family Bank?

Last update on: Apr 20 2021

These days a lot of parents or grandparents find themselves acting as the family bank or ATM. They provide financial assistance to family members who should be financially independent. The trouble is, unlike a real bank, you don’t get repaid most of the time. Many people find they are reducing their standard of living or becoming financially uncomfortable because of the money they give to other family members. They also risk eventually becoming burdens on the family members they are trying to help.

Merrill Lynch recently did a survey on the issue and issued a report about it. It defines the problem and how it can come about. Importantly, it also gives advice for setting boundaries and restrictions on family financial transactions and incorporate such transactions into your financial planning.

There is a dangerous absence of planning, discussion,
coordination and establishment of safe boundaries as people
navigate these new family interdependencies. This lack of
proactive engagement and discussion can negatively impact
every aspect of a person’s retirement.
Very few people talk with close family members about
important financial topics, such as level of financial security,
plans for living arrangements in retirement, inheritance or
long-term care. Seventy percent of those age 25+ have not
had an in-depth discussion with their parents about these
retirement issues. More than half of those age 50+ have not
had such discussions with their adult children, and nearly one-
third age 50+ have not even had such discussions with their
spouse (FIG 24). Just one in four (24%) have discussed how
their parents will be financially provided for or cared for as
they get older.

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