The new juggle:
Helping adult children while saving for your own future

By Kelly Greene, TIAA Senior Director and co-author of The New York Times best-seller The Wall Street Journal Complete Retirement Guidebook
Big kids, big bills?
It certainly feels that way for many parents of adult children whose work lives have been upended by the Covid-19 pandemic.
Balancing how much you can afford to help your children while also saving for your own financial future has always been a tough balancing act, but right now it can feel like walking on a high wire.
The financial needs of adult children are real. They’re moving back home or asking for loans to meet expenses following the job losses and ensuing financial problems that have hit younger workers particularly hard.1 If they have jobs and small children, they may be struggling to afford childcare, tutoring and other expenses to stay employed while also helping with remote schooling.
But there are also silver linings, including pandemic weddings, babies, and the chance to buy a home at some of the lowest prices and interest rates in years. And some college-aged children are electing to go for advanced degrees since the job market’s so tight. Other adult children and grandchildren are moving back in with happy grandparents who have bigger yards in less populous places.
But all of these milestones cost money, and our instinct as parents is to help. And few things feel better than helping your family—as long as doing so doesn’t impact your own financial well-being. Many parents count on using the years after their children move out to catch up on retirement savings. It’s not much of a gift to your children if the cash cushion you provide now leads to your asking them for help down the road.
So how do you help your children without giving away your future? Here are some strategies to help guide you through the new parental balancing act:
First stop: Family meeting. Talking things through may sound obvious—but it’s tough to get started when it’s your own family. Before you make assumptions about what, or how much, your child needs or wants from you, it pays to ask. It might turn out that they could benefit most from your time or experience: Advice on ways to negotiate lower payments on credit cards, loans or rent. Remote-schooling relief while they rewrite their resume. A short-term loan of your color printer. You get the idea.
If they do need money, find out how much, for what purpose, and whether they are asking for a loan or a gift. This is easier said than done, of course. If your family traditionally avoids talking about financial issues, you may want to read this guide for questions to get you started, such as:
  • If you had a financial question, would you feel comfortable coming to me?
  • Do you need my/our help financially, whether it’s for smaller monthly expenses, or larger ones?
  • How would you cover those costs if I couldn’t support them any longer?
Once you understand the need, pause before you make a commitment. You could of course let them know that you’ll do what you can. But take the time to review your own needs before you say what you can afford.
Next, get out your spreadsheets. Okay, few families are so organized that they have an actual spreadsheet, but if ever there was an argument for taking a good look at your current cash-flow plan, from income and expenses to savings goals, that time is now. And however much you decide you can afford to give, or loan, your adult child, resist the temptation to pull it from your own retirement savings.
If possible, check in with a financial professional as well. Many workplace savings plans offer access to advice if you don’t have a relationship with an advisor already, and they can help you assess any impact that adding a new expenses might have on your future goals. This could help you feel more comfortable with the amount you decide to give. And you could make a date to check in again in a few months to make sure you’re still on track.
Agree on a payment plan. If you are making a cash loan to an adult child, it’s important to put a repayment plan into writing. Then, make sure everyone actually reads it and signs off. To help your child become more resilient, consider asking them to agree to save a certain portion of each paycheck when they start working again. (Remind them that it’s also a good idea to start saving for retirement while still paying off debt. If they’re not working, you might help them set goals for job hunting—and volunteering with the many worthy causes currently seeking help.
Likewise, if your kids move back in, consider having them sign a lease that sets out an initial time frame, rent (possibly on a sliding scale depending on the employment situation), and any household rules.
Other milestones. In these extraordinary times, it’s okay to ask your adult children to reevaluate together a big-ticket expense that you might have felt more comfortable covering just six months ago. For example, with any weddings still happening right now limited in size, it may be worth considering a smaller guest list even if you’re planning for a year or two out. Or, if the couple envisions a bigger celebration, consider trimming back on costly extras that few guests would miss, from elaborate centerpieces to a post-wedding brunch. And if you have a child weighing graduate-school programs and tuition, you could work together to weigh the options for the types of student loans and interest rates available, and ways you might help bring down those costs. If they are considering a field of study that could lead to work for a nonprofit organization, it’s never too early to start learning about the Public Service Loan Forgiveness Program, for example.
Embracing milestones, and finding ways to afford them, could help you better get through these challenging times. And empowering your adult child as a financial partner, rather than the recipient, of any loans or gifts could go a long way toward continuing your own confidence that you can keep working toward your retirement goals—while also rebuilding their own confidence in their financial future.
This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.