First Person: We Won’t Let Kids Ruin Our Retirement

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Having been helping several boomers plan for their retirement lately, I've been exposed to a situation that has been quite an eye-opener regarding kids and their affect on retirement. Being an only child myself, and raised largely by a single mother, I've mostly been self-sufficient as an adult. With a few exceptions of multi-month stints where we've moved in with parents during home sales or when relocating, we've pretty much been on our own. But my recent experience with boomer retirement planning has helped me see just how big an effect adult kids who aren't as self-sufficient can have upon their parent's or parents' retirement.

The boomers who are the prime examples that I'm basing this article on have footed the bill for private schools, college tuitions, the cost of adult children living at home, as well as covering the vehicle insurance for adult kids, some of whom are in or very close to their 30s. It has left these parents in a poor retirement situation and has been an example that has helped me make a few choices regarding how we plan to raise our kids, hopefully without them leaving us scrambling when it comes to retirement.

Living Location

The boomers in question decided to stay in an area with poor schools and send their children - all four of them - to private school. The bad thing about this was that not only was the private school costly, but they were paying fairly high property taxes for the area in which they lived.

Due to poor public schools, we faced a similar situation with the area in which we lived, but we decided that rather than pay nearly $10,000 a year for private school, we'd rather move to a location where property taxes were a bit higher but the schools were better as well. It ends up that we lucked out though, finding an area with great schools and getting a lower property tax rate in the process, saving us not only in taxes but tens (and maybe even hundreds) of thousands of dollars should we have decided to send our kids to private school.

College Plan

These same boomers, who sent their kids to private school, also paid for their kids' college educations. Unfortunately, of the four children, only one graduated with a degree, leaving hundreds of thousands of dollars on the table without the results to show for it other than being left with very little in retirement savings as these boomers neared their golden years.

Personally, while I had help from my parents for my college costs, I was also on the hook for a third of all my costs. This meant that while I wasn't overly burdened by my educational costs, I did have a financial stake in the process, and my parents (who are divorced) didn't have to overextend themselves financially.

I think that this is a great way to handle college costs, and we will likely stick to a format similar to this with our children. This way they learn to be financially responsible, hopefully have a greater interest in seeing their education through to completion since they are paying for a large portion of it but won't graduate with an overly-excessive student loan debt burden. And we as parents hopefully won't be left burning through our entire retirement savings in the process.

Adult Child Assistance

This same boomer age family has had adult children living with them consistently over the past ten years, adding further financial strain to their financial and retirement planning situation.

Personally, I don't mind the thought of helping an adult child occasionally if needed. Kids -- even adult ones -- can run into bad situations and can need a hand once in a while.

I'd rather help my children myself than have to have them have to turn to government assistance. Hopefully I won't have to, but if I do, rather than just let them sit stewing in our home, we will sit down and come up with a plan. There will be goals, a timeline, and similar planning not only to help them help themselves, but to help my wife and I not have to dip into our retirement savings in an effort to dig them out of a hole that they should be learning how to dig themselves out of on their own.

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