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Your children are not your retirement plan

Wealth can cause people to become less empathetic or compassionate and the desperation of poverty can have a detrimental effect on character.

There are so many reports about how financially unprepared people are for retirement. But behind those stories are real people who struggled to save, but ended up stumbling into retirement sooner than they had planned. In many ways, retirement planning commercials with their beaming seniors walking on a beach, financially set for retirement, portray a life that so many won’t experience.

Those retirees look happy. It seems they have been planning and getting all their ducks in a row forever. I applaud all who have done so, but wonder how many of us are/will be like those people? The consequences of not saving enough for retirement can play out in numerous, yet subtle, ways. The results aren’t always disastrous, but they’re almost always sad.

Retirement should not be a burden, but if we’re being honest, we all carry a deep fear that we won’t have enough money to sustain us through retirement – thus becoming a financial burden to our children. 

Define your values

Money isn’t the easiest subject to talk about – especially for families. But by explaining your financial situation, goals and priorities, you get everyone on the same page.

Before you discuss money with your kids, you (and your spouse) may need to examine your own values about wealth. Many parents have a clear sense of the values that they’d like their kids to develop with respect to money, but may be less discerning about their own values or whether those values align with their behaviour.

If your lifestyle is driven by conspicuous consumption, but you repeatedly tell your kids that money can’t buy happiness, your kids will question whether the values you preach are aligned with the behaviour you practice.

Just say no

A plan can be disrupted by many things, and some parents have a hard time dealing with one expense in particular: they can’t say no to their grown children. You don’t have to help your adult children every time they ask for it. The first and hardest lesson and the obvious thing is you must learn to say no. At the very least, if you cannot say no, establish the proper financial boundaries.

There’s nothing wrong with parents wanting to sacrifice for their children, but when you continue that mindset after your kids reach 25, 35 or even 45, it can impose a significant burden on your ability to retire. You are enabling your adult children to turn to you as a financial plan B or backup plan. That’s a huge problem.

Too much financial support could even be preventing your grown children from becoming self-sufficient. Often there has been a pattern of financial entitlement, where adult children or grandchildren have not learned to live responsibly and stand on their own two feet. The parent is helping and enabling just as much as the kid is asking.

It works both ways

No matter how well you think you know your children, money can make them unrecognisable in an instant. Studies have shown that just bringing up the concept of money is enough to alter behaviours, let alone real financial situations.

Whether your children get richer or poorer is beside the point: it’s possible for your children to get rich and become less empathetic or compassionate because of wealth. As for getting poorer, desperation can have a detrimental effect on character. While it’s an ugly generalisation, poverty can drive some people to become more calculative and deceitful.

As your children go through the same phases of life you do (from school, to work, to the peak of their career and the various ups and downs), their financial situation will fluctuate. As a result, their personalities and beliefs will also change. However well you know them now, financial realities can turn them into completely different people. For that reason, it’s never safe to assume your children will be the same generous, giving types that they are today. Hope for the best but prepare for the worst.

Your children are not your retirement plan.


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