Dear Mom and Dad,
Thank you for continuing to support me financially even though I’m 28 years old, well educated, own reliable transportation and earned nearly $75,000 last year. Your generosity is overwhelming, but something is bothering me. Are you putting your own retirement at risk by paying part of my rent, supplementing grocery purchases and offering a clothing allowance?
When you offered to take a loan from your 401(k) plan to help me buy my first home, was that wise? Paying back the loan with after-tax dollars may not make good financial sense. When you offered to help pay for graduate school, did you consider the additional three to five years added to your working careers?
A July 2014 survey by American Consumer Credit Counseling, a Boston nonprofit, found that one in three U.S. households provide financial assistance to their adult children. One in five millennials live at home. Health & Wallets reports that only 21 percent of baby boomers supporting adult kids are retired, compared with 53 percent of retirees who do not provide financial support.
Your financial adviser has planning tools available to evaluate the impact on your retirement by continuing to supplement my income. She can help you stay focused on retirement goals and measure the effect of gifting to children on your savings rate. I want you to have enough income during retirement so you can live comfortably and not outlive your money. Besides, my apartment is way too small if you two are forced to move in.
I’m glad we’re having this discussion. Putting off necessary critical life skills such as saving and investing hinders my financial independence. I know you mean well, but I could fail to learn essential budgeting skills and how to match up expenses with income. I could even start saving part of my income now for eventual retirement. My 401(k) at work has a company match benefit, and my money comes out before income taxes. I will barely miss it on my paycheck.
Maybe you could set boundaries for me that limit the time I can live at home during an emergency move back. Having an eventual exit plan from the nest will encourage me to pin down my next job or obtain further education. I’m happy to contribute to household expenses if you set an expectation to do so. Give me a list of small jobs and chores on my day off. I’ll even sign a promissory note when you loan me money and repay it, plus a modest rate of interest. This will keep the accounting straight with my siblings and not create a gift-tax problem for you.
The last thing I want is entitlement at your expense. Seeing you retire someday will be enough reward for me. After all, you raised me. I will become a self-reliant individual, living independently, while no longer needing or consuming your scarce resources.
In the meantime, I remain quasi-needy and semi-dependently yours.
Your devoted son or daughter.