What Retirement? I’ve Got Kids.

In the You Thought YOU had Problems department, consider the case of Giancarlo Casagrande of Bergamo Italy.  Earlier this year, an Italian Court ordered the 60 year old father to resume paying $492/month in living expenses for his 32 year old daughter who has been working on her graduate thesis for the last eight years. Casagrande and his wife divorced in 1997. As part of the settlement he was required to pay living expenses for his then 19 year old daughter, a full-time student residing with her mother. Years later, the expense became burdensome for him, as did his daughter’s inability to complete her educational requirements. Much to the outrage of the sane population, the court ruled in favor of the young woman. Silvio Berlusconi’s cabinet minister, Roberto Calderoli called the verdict “a slap in the face of good sense.”

Millions of Americans feel Giancarlo’s pain. We give to our grown children until it hurts. The trouble is, by the time it hurts we’ve given too much. A few years ago, our financial advisor cautioned us against catering to every one of our grownup kids’ financial needs to the detriment of our retirement. I looked at her bemusedly and said, “But we can afford it.”  Her answer? “You only think you can afford it.”  She was probably right.

Our advisor’s voice is but one in a choir of voices who sing the same song. There is no doubt among financial planners and economists that the children of Babyboomers have been the most indulged generation of all time. Objects of desire are ubiquitous and marketed to death. All I remember dying for in my teenage years was a stereo and a pair of white go-go boots. (If you don’t know what those are you are actually young enough to benefit from the upcoming advice.)  Today our teenagers expect cellphones and computers and video game consoles and ipods and expensive jeans. And that’s just for the teenagers!  The recession has made matters worse. Many of us have adult children who are unable to make ends meet. Practically everyone I know has helped with student loans or mortgages or down payments on new homes or credit card debt. Some pay rent on their children’s apartments while the kids go for advanced degrees. Some  have invested in their kids’ new businesses while also paying for weddings. We pay airfare for visits back home. We pay for health insurance. Expert opinion is unanimous. We are crazy and this has to stop. Immediately.

The Certified Financial Planner Board of Standards, practically yells at you from behind your computer screen that it is unwise to sacrifice you financial wellbeing in favor of your children’s. In an article titled, It’s Okay to be Selfish: Your Financial Wellbeing Comes Before Your Children’s, the CFP board claims that “we can no longer afford to think about our personal finances the way we did in the bubbly pre-recession days. Today there are new financial realities and we must re-examine some basic assumptions and consider some new approaches.” 

Apparently, the most important new approach is to put ourselves before our children. It is a concept that flies in the face of everything Babyboomers have come to believe about parenthood.  

Thomas J. Stanley and William D. Danko, authors of The Millionaire Next Door, are staunchly opposed to “economic outpatient care,” a phrase they dubbed to describe adult children financially dependent on parental bailouts.  They, along with psychologist, Gary Buffone, author of Choking on the Silver Spoon, argue that financial help can do more harm than good. “Typically,” Buffone states, “the more dollars adult children receive, the fewer they accumulate, while those who are given fewer dollars accumulate more.”

The most cogent argument I found for keeping my wallet closed is that if my husband and I don’t take care of our retirement (what retirement, we often ask)  the burden of our financial wellbeing will fall to our children. Then our whole plan to keep them happy will have backfired. Being selfish may be the best way to take care of our kids.

Getmoneysmart.com offers a checklist for parents struggling with kippers, a British acronym for Kids in Parents Pockets Eroding Retirement Savings.

 From an early age we should be teaching our children about the art of delayed gratification. (Unfortunately, that’s good advice coming too late for many boomers taken by surprise by the recession.)

1. If you feel obligated to put yourself in the poorhouse in order to keep your children from feeling any lack or want, you have some emotional issues. Are you worried your children won’t love you or want to see you if you stop providing for their every need?  If so, seek therapy.
2. Send your children to a personal finance class so they can learn to save, budget, and live within their means. It might not be a bad idea for you to go as well, but not on the same day.
3. When you are asked for money, carefully evaluate what the money will be spent on. Is this a necessary expense?  Will this money help your child venture out on his own or will it create more of a dependency problem?
4. Don’t feel guilty about helping out in a true emergency. If your child has been evicted, for example, you can give her a place to stay temporarily. That doesn’t mean you have to pay for her social life as well.
5. If your child consistently makes bad money decisions, it may be time for tough love. Sometimes you need to stand back and let your child fall. Changing the locks is one way of doing this.
6. When you do decide to help your kids, draw up a contract with a payment schedule, interest rate, and payoff date. DO NOT waiver from this commitment. If your child does not honor his financial debt to you, DO NOT give him another cent. EVER. Make the consequences of noncompliance clear early on.
7. Share your success story with your children. Let them know you didn’t always live the way you live now. Describe the years of hard work it took to accrue your home and possessions.
8. Give plenty of emotional support. Chances are our children will never be as affluent as their parents. The babyboomer generation had the wind at its back for many years.

The line between helping and indulging is a thin one and in these trying economic times the line is constantly shifting. The best advice is that which we hear on airplanes. Put your own oxygen mask on first before helping your children with theirs.

The never-ending thesis that has kept Giancarlo’s daughter on the dole for eight years is about the Holy Grail. As far as I’m concerned she can stop writing now. I think she’s found it.

Photo by scrapetv