How long should parents keep helping adult kids financially?

[healthy11]

To Help or Not to Help

Parenting is hard work. And parents of adult children, in some ways, have it even harder. That message jump-starts a new book, "Parents to the End: How Baby Boomers Can Parent for Peace of Mind, Foster Responsibility in Their Adult Children, and Keep Their Hard-Earned Money." The author, Linda Herman, a psychotherapist in Seattle, tells a familiar tale: Parents in their 50s and 60s—just when they think they're done raising their children—find themselves footing the bill for all manner of goods and services: new furniture, cellphone fees, medical expenses. Eventually, some painful questions take center stage: How much help is enough? And when is it OK to stop? Ms. Herman answers those questions with no-nonsense advice and strategies. (Among our favorite sections: The Bill of Rights for Parents of Adult Children. Among them: The Right to Be Free From Guilt.) Yes, it's understandable to want to help one's adult daughter or son, Ms. Herman writes, but not at the risk of "becoming your child's permanent hotel and bank account." In all, a wise and invaluable book.

To learn more, go to www.parentstotheend.com (The book is listed at the top right side, but there are some thoughtful blog posts on the site as well.)

Additional articles on the topic include wallstcheatsheet.com/personal-finance/5-things-you-should-stop-paying-for-when-your-kid-graduates.html/?a=viewall and
www.forbes.com/sites/nextavenue/2016/07/24/how-boomer-parents-can-stop-babying-their-millennials-financially/#b2e1e7f60055

If you do end up providing money to your young adult children, at least you can take consolation in knowing that you're "not alone." The following article says 73% of parents aged 40-59 did end up helping, according to a 2013 survey: www.fool.com/investing/general/2016/02/21/think-youll-save-a-lot-of-money-when-your-kids-mov.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article

Here's advice on how to help your adult kids save more money: ww.kiplinger.com/article/saving/T007-C002-S003-how-to-help-your-adult-kids-save-more-money.html

[mamak]

Great tip! My first is on her way and working in her field prior to her college graduation but my next one will surely be a challenge.

[shawbridge]

I think the answer is it depends. For an able-bodied/minded kid, there can be a transition path that is abrupt or a little gradual, but if an adult does not adjust expenses to income, he/she will not be able to save for retirement, college, etc. On the other hand, for a kid with significant disabilities, it may be difficult or impossible to transition fully as the kid may not have the capacity to earn an adequate income, live independently, etc. I suspect the book is aimed at the able-bodied/minded kid, but it is not one size fits all.

My own instinct is to help them build their savings where I can rather than subsidize day-to-day living. That said, as ShawSon is living the startup life, we're still paying for a few things (cell phone, car insurance). Had he chosen a job in finance, we'd have transferred it all.

[healthy11]

Shawbridge, I concur. While our son has been hired by a company that pays a decent salary and offers benefits, there is a waiting period before the benefits begin. Even after the benefits start, like medical insurance coverage, we know that our son has no savings to be able to afford high copay or deductible amounts if he was to have an emergency or incur other major expenses. We want him to live within his means and begin his own savings plan, but at least for the foreseeable future, we accept the role as his "financial backup."

[jisp]

And even if your child is able bodied and doing what they should be doing the way our health care system is, many may still need help with health expenses and insurance plans for a period of time. Why? Because our health care system is so fragmented that for some children switching health care plans might mean transitioning to different providers for chronic health issues or mental health at a time of transition, when the last thing they want to be doing is switching their doctor. Often health care plans for young people are limited especially when it comes to mental health. Also until Obama Care becomes law many plans can exclude people with chronic health conditions making it challenging for a young person who might be working and doing everything they should to actually get health insurance.

[healthy11]

Here's information stemming from a U. of AZ study that claims half of recent college graduates are still at least somewhat dependent on their parents/family for financial help two years after graduation.

"Along with piles of student loan debt, the tough job market has likely been a big factor, with only 49% of graduates saying they work full-time. Even among those who have full-time jobs, nearly half say they still rely on family for financial support...Of the more than 1,000 students surveyed, only 300 said they are completely self-sufficient now that they are two years out of college."

money.cnn.com/2014/06/10/pf/college/college-grads-parents/

[jisp]

One reason many young people might still be dependent on families, even if they have a good job is housing!!! In many parts of the country a starting job salary will make finding decent safe affordable housing a challenge. We recently started to explore the rental market and were SHOCKED at what we saw. 4K for apartments that were substandard in so many ways. This is one of those situations where the rich get richer. Children with parents who can help might buy a condo instead of renting to save money. They then will sell that condo at a profit and gradually gain equity while those stuck trying to find affordable rent and also trying to save some money will struggle and fall farther and farther behind.

www.npr.org/2014/05/27/316110665/lack-of-affordable-housing-puts-the-squeeze-on-poor-families

[SharonF]

Jisp nailed it.

More and more economic experts are realizing that a key part of the US economy is missing: college graduates with disposable income. In previous decades, every aspect of the economy relied on recent college grads (and their salaries) to buy everything from cars to couches to houses. Despite a few hiccups now and then, the college grads who made up the robust middle class kept the overall economy humming for at least the past 50 years.

But that steady stream of middle class money is drying up, as college grads (and college dropouts) pour a significant portion of their paychecks toward paying off student loans.

In the meantime, they defer other purchases for years. Sometimes as long as 20 years, until those college loans are paid off.

blogs.wsj.com/economics/2014/05/21/larry-summers-student-debt-is-slowing-the-u-s-housing-recovery/

The article contains good information. The comments by readers at the end capture the growing sense of futility as lower and middle class wages have been stagnant for three decades, work productivity has continued to increase, and the cost of nearly everything from a college degree (and the exceptionally high interest rates on student loans) to rent and groceries exceeds the ability of many folks to pay the tab.

[eoffg]

Jisp, you wrote: 'decent safe affordable housing'.
I think that is a topic that is being added to History textbooks, about last century.

In an age when a house was bought to live in, rather than as an investment.
But hopefully the bubble will burst before too long?

[healthy11]

We did pay off our son's student loans as a graduation present (if he didn't graduate, they would have been his to resolve) and so now he is considering what's next... Today he forwarded a real estate listing for a small house that he'd like to bid on.... He's nearing the end of his year apartment lease, and is frustrated that the landlord hasn't successfully repaired the unit's broken air conditioner yet, so he thinks owning a place might be a better solution. While the basic mortgage cost wouldn't be much, because he works in a town with a very depressed economy, I don't think he realizes that property taxes, insurance, etc. plus even higher utility bills on a larger unit, and regular maintenance costs (not to mention major repair costs) would more than double his monthly expenses. Not to mention, if his job doesn't work out, he's going to have a hard time finding comparable employment opportunities in that area, versus just being able to "up and go."

[majorv]

Hi everyone! We're in a little different situation with our 24 yo daughter, and not something I really like but feel I have no choice in. She graduated last August but hasn't gotten into vet school yet. Unfortunately, because of a lack of critical information when she was an undergrad she's found that entering vet school is not possible until she takes 4-5 more science classes to raise her Science GPA.

She still lives in the small college town, sharing apt rent with her BF and working part-time at a vet clinic there. We subsidize by paying half of her half of the rent...no big deal as it's only $150 we contribute each month. She can't work full time and make good grades in these classes. So, for the next 1 to 1 1/2 years this won't change. Problem is, paying for the college classes! She'll have a mountain of debt paying for vet school, when she gets there, so we're avoiding taking loans out. So, yea, we have to help pay for these classes, too. She gets small scholarships to help, but still...

On the bright side, our 22 yo ADHD son has a full time welding job, has an apt with his GF and except for a little financial help once in a while, he's really stepped up to the plate on managing his finances!

I still cover both on my medical/dental insurance, but I know that can only last until age 26....we'll cross that bridge when we come to it though.

[michellea]

My dd is interning at New Balance and started working out in their gym today. Her text said that "we" needed to go to the New Balance outlet to get her new sneakers since her Nike shoes made her look like an intern! "We" means me with my credit card!

Actually, she is doing great this summer with her paid internship - not complaining too much about 3 hour round trip commute, and saving her money. But, she still isn't afraid to ask for parental financing....... BTW - I suggested that she go to the outlet after work (implied w/o me). She did not reply!

[healthy11]

Majorv, my nephew, even with his B.S. and Master's degrees in engineering and 3.9 GPA, spent this past year taking additional science courses (anatomy, adv. biology, etc.) so he could get into veterinary school. He was accepted by several universities, but plans to return to U. of FL, because he's familiar with that campus since it's where he got his other degrees.

As far as your son goes, it's wonderful to hear that he has found a full-time job doing something he seems to enjoy...did he ever finish his welding certification, or has he been able to get work without it?

Michellea, do all the people at New Balance wear sneakers at work? If so, I can see where Nikes would be an obvious "signal" of an outsider, but what about wearing sandals or flats or something completely different, that New Balance doesn't make?

[michellea]

Healthy - she is ok while working - she wears a mix of shoes, sandals and PF Flyers (the division she is working for and she is a perfect sample size 7.5). But, while at the company gym, she only has Asics and Nike for working out - and I guess she felt funny! Truth be told, she will find any excuse to buy (or have me buy) new apparel of any kind.

[healthy11]

Michellea, I remember a discussion years ago where your daughter left her "prize possession" Ugg boots at a lacrosse field or someplace similar, and another discussion about which rainboots to take to her dorm, so I guess footware has always been a high priority for her! How appropriate that she's gotten an internship in that field!!

[shawbridge]

health11, realism are not us. Maybe some day. Remind him that if owns the place, he'll have to spend time repairing/replacing the AC.

ShawSon is planning on doing a one semester EdX computer science course in a month so he knows something about computer science before he enters his masters program in data science. He figures he will spend 3 hours a day. Who knows? Seems like not exactly a realistic plan, but he has delivered big time whenever he sets a goal. So, while we may ask him some questions, we don't bug him.

[healthy11]

Shawbridge, it's not only A/C, it could mean paying for new roof shingles and other big expenses, not to mention all the routine little things that consume one's time and budget, like weekly lawn mowing, snow removal in winter, etc. The only "upsides" that I can think of to my son owning a house are that he wouldn't have to be as worried about disturbing his neighbors when he chooses to work late on his vehicles, and maybe he'd be so busy taking care of his home that he wouldn't spend as much time riding dangerous motorcycles!!

Your son has always "achieved his goals with flying colors" and I have little doubt that he will do likewise again, as he embarks on this next phase of his life!

[michellea]

Healthy - yes, footwear and fashion are priorities for her. She is loving her internship - PF Flyers is very "fashion forward" and she has been able to enjoy working on projects with Kate Spade, leading fashion bloggers and the like and is getting a glimpse into the fashion industry. (Last week she went to a fashion shoot with a "very hot" model). Glad she was able to stay in the Boston area and find a well paying, interesting job. She is already dreaming about living in NYC next summer

[majorv]

Healthy, I'm curious to know how your nephew does in vet school. U of Fl is one of the places my DD was interested in.

DS never got his certification, and he does regret it now. It has stopped him from getting jobs at the larger companies but he enjoys working where he is right now. It's a small shop where they weld custom sporting stuff - gun racks, hunting stands, fishing rod racks for boats, etc... Now he's thinking he'd like to get into welding inspection. It makes more money, but he realizes he needs more experience and some book learning, so we'll see.

[healthy11]

Michellea, I'd mentioned previously how one of my nieces (who majored in business marketing/PR) had an internship in the fashion industry in NY. As much as she liked seeing all the latest styles and glitz/glamor, she admitted that except for the "big name models and designers," so many other people, especially lower-level employees, basically just do "grunt work." She'd work long hours for low pay, and yet the cost of living in NY is ridiculously high. My niece has decided not to go back there after graduation, if she can get a job elsewhere.

If your daughter is serious about interning in NY next year, she might consider a dorm style room at a place like websterapartments.org/wordpress_129693803/ but realize it really will be a very "basic" accommodation. Best to her, no matter where she's at.

Majorv, my nephew took his extra science classes at Auburn, and I know he also applied to their vet school, but I believe it has a focus on more "large animal care" like horses and farm animals. His interest is just in conventional dogs and cats; he doesn't even like handling his grandmother's parrot, or the many rodents we've had as pets over the years. I know my nephew also applied to Purdue and Kansas and University of IL and a couple of others, but U. of FL "won out" because he already knows the campus and the area...I'll keep you posted as to how it goes.

[jisp]

Michaella,
My daughter lived in NYC one summer. She was determined to not cost us any additional money that summer so she had to supplement her non-paying internship with a retail job. The retail job actually ended up being a more important experience for her. It was challenging but she was able to find affordable housing the way most young people do by sharing a small space with others. I her case she shared a space with others from our town who happened to be attending college in NYC and were able to sublet their roommates space.

She did say that she would not want to live there until she was earning a salary. She did to apply to any graduate schools in the NYC area. But she talks about moving down there once she graduates as an NP next year. Although who knows if she will since she now is talking about getting more training in alternative medicine, which means she might have to head out west.

She does however have several friends who are living in NYC. For the right personality it is possible to make it there. And what is nice is that once you do start to move up the ladder in NYC it can be a fun and exciting place to be. I will email you with more details.

[healthy11]

My son's situation has just taken another turn...his apartment lease is written for a year, 'til August, after which time it becomes a monthly renewal. He just found out from another tenant that the landlord is thinking about selling the building, which, if it happens, will likely mean a rent increase and the new owner would probably not allow a month-to-month lease extension. My son definitely doesn't want to be locked in to another year there, so he's more serious than ever about buying a place of his own.

When I emphasized that homeownership also entails a commitment to staying in that community for a number of years, presumably with the same job (because there are very few engineering companies in that town) he said, "I guess I could see myself here for awhile." (It's the first time he's expressed that sentiment about his job. His girlfriend has 3 more years before she finishes Optometry school, and they're definitely not thinking about marriage until afterwards, assuming they're still dating then.)

I found out about a special program for first-time home buyers in our state who make less than a certain annual income, and it could assist him with up to $7,500 towards a downpayment, except they don't think the program will have enough funding to last more than another month. He's getting pre-qualified now, to find out how much of a mortgage they would actually approve him for, and then it's a matter of trying to see if he can find a reasonable place. There's a risk he could be "stuck in the middle of the process" and have a contract to buy, only to have the state run out of downpayment assistance money, in which case the "Bank of Mom and Dad" would end up having to help out. As always, time will tell...

[sleepy]

Could he write a contingency in any offer that allows him to back out if the state doesn't come through with the money?

It concerns me that he needs funds from someone else in order to make a down payment on a house. That is not usually a good start to home ownership and was a very common problem for people to buy a house when they really couldn't afford one. If you are going to support him financially if he needs it, more power to you (and him), but otherwise, he might want to re-think a house purchase if he can't afford the down payment on his own.

[healthy11]

Sleepy, It's definitely a good idea about a contingency if the state doesn't come through with their money, but I'm not sure if sellers would accept an offer that way. It's something he can ask, if it gets to that stage.

Truthfully, my son has already saved enough for a 10% downpayment on a modest home in the town he works in, but for a conventional mortgage (not FHA/VA) if you can put 20% down, then you aren't required to have additional private mortgage insurance. My son also has a 401(k) at his workplace, and a separate Roth IRA, and even though you can take loans against them, that's not something we feel he should do. He could probably sell one of the two cars or two motorcycles he owns, which are all fully paid for (I vote for the motorcycles!) but he got them used, and so he couldn't expect a windfall from them. Clearly, the state program for first-time homebuyers sounds ideal, if they maintain funding.

The bank rep that we spoke to yesterday said that he expects my son, who has established a good credit history since he was 18 (see millermom.proboards.com/thread/7536/credit-cards-building-score-important ) to pre-qualify to purchase a house at least twice the price range in which he's currently looking. Obviously, it wouldn't be wise to "max out" even if they said he could, because as any homeowner knows, there are always unexpected repairs to be made, etc.

I'm not sure what to really tell my son as far as our ability to "be the backup bank." In speaking to my own boss yesterday, he revealed that he helped two of his young adult kids with downpayments on their homes, and he's willing to do the same for his youngest daughter when she feels ready to buy a place. The economy being what it is makes things a lot more difficult today than when we were just starting out.

Honestly, the biggest concern I have is not whether our son can afford his monthly mortgage payments, because he's taken care of ALL his financial responsibilities since he graduated (rent, utilities, food, autos [including insurance, repairs, and gas], and his medical bills, etc.) but what I really wonder is whether he's ready to "settle down in one place?" And then, whether his current town is the "right" place to buy, or whether accepting a longer commute might put him in a better community for eventual resale value? And since he's dated the same girl for so many years, how does she figure into his future plans? (Her parents claim that the optometrist they currently use has already said he'll hire her after she graduates in 3 years. Where my son works is over an hour away and there aren't many major communities halfway between here and there.)

ADHD'ers, especially, have trouble with "boring routines." I'm glad he seems to be content in his current job at the moment, but it's still fairly new...things like being sent on his first business trip might be viewed as a "change of pace" now, but a "pain in the neck" later, when he has to figure out who can watch and care for his house when he's out of town. While he knows how to mow a lawn (and did it to earn an allowance when he was younger) it's a different story when it HAS to be done come rain or shine.

A major purchase is never an easy decision. My son already called us this morning, to say he was feeling "stressed" and his heart was racing and he was unsure what to do. (He's been prone to panic/anxiety attacks before.) We can't tell him what to do, but we did try to reassure him that lots of people feel nervous about buying a home, and right now, if he doesn't feel ready, then he doesn't have to do anything. Pre-qualification for a mortgage just gives him more options, if he decides that renting isn't what he wants to continue doing.

[lauren]

I am glad to read these responses as it helps me clarify my thoughts about this. It truly does depend on the kid and the situation of course. I have a typical kid who just graduated college and is moving out of state for a job - the salary is decent but he has a lot of student loans to pay off...to the tune of $500/month! Plus, he will have a car loan and of course rent in addition to food, gas, and whatever else he needs. Right now he is broke - starts job in a month- and I feel obligated to help him furnish the apartment (tag sale furniture so far) but we had to pay the tax on his car because he just didn't have the money, and beds are not cheap either! So while I'd like for him to "launch," I also realize that it's going to take a couple of months of salary earning to get comfortable.

We are leaving him on our health insurance because it doesn't cost us any extra.

But this is all for a typical kid with no issues. When it comes time for my daughter, things will be trickier. I fear all the time that she will never be able to completely support herself - but if she is employed and happy, then I probably won't care about helping her if I'm able.

[alchemie]

My daughter never got past the 1st semester. She's 24 now, and still living under our roof. We're trying to get her SSI but just learned that her school destroyed all of her Special Education records, which Social Security wanted. I hate this state!

[healthy11]

Alchemie, welcome to Millermom's forum. If you don't mind my asking, which state are you in? Even within states, policies seem to vary from school district to school district, but I'm really surprised that for any student who is just 24, the records would have all been destroyed. I'm guessing she might have graduated from 8th grade in 2004, so it's just been 10 years for that, and obviously even less time has passed since she got out of H.S. In my state (IL) "The Special Education Student Folder shall be kept until the student is 27 years old." I haven't read through all of this yet, but it describes national school privacy/documentation guidelines: nces.ed.gov/pubs97/97527.pdf

I'm also wondering, since you mention that your daughter tried to attend college, whether you had to provide any records to them from her earlier school years? For example, when my son took the ACT and we filed for an extended time accommodation, they needed copies of his most recent psychoeducational testing. Although the H.S. evaluator didn't give every test score from his elementary school years, reference was made reference to the fact he'd been tested several times when he was younger, so it established a "history of need." Then, when he did decide which university to attend, we also provided copies of those records to the college's Disability Services Department, so he could get accommodations there, too.

[bros]

Jul 6, 2014 13:05:11 GMT -5 healthy11 said:

Alchemie, welcome to Millermom's forum. If you don't mind my asking, which state are you in? Even within states, policies seem to vary from school district to school district, but I'm really surprised that for any student who is just 24, the records would have all been destroyed. I'm guessing she might have graduated from 8th grade in 2004, and so it's just been 10 years...
I haven't read through all of this yet, but it describes school privacy/documentation guidelines: nces.ed.gov/pubs97/97527.pdf

My district destroys records five years after the student graduates from HS for privacy reasons, however, they are required to keep IEPs for around 10 years

[kewpie]

Alchemie,

I am not surprised about your child's records. My district "lost" BOTH of my children's records before they graduated from high school. We had to litigate about both children and the documentation that had would have created a huge bonfire. We realized that one child records had "disappeared" when the district was filing due process against us (for a 2nd time) and then they realized all the records were gone. (OK this was amusing at the time) and a settlement was reached. I can't remember when we discovered the other child's were missing. Maybe when he applied for SSI? Fortunately I keep good records.

[healthy11]

Well, our son turned 24 a couple of weeks ago, and made an offer on a house today...It's a "short sale," so the seller's bank also has to approve the purchase, but the realtor thinks there's a good chance they will. The housing market in the town he's working in is very depressed, and with so many homes being foreclosed on, the realtor feels he's very well qualified to become a homeowner...We could see on his face that he was "hooked" on this particular house, even though it has some work to be done because it has a 3-car garage for all his "toys!" Even if we, as parents, aren't helping him financially with it (assuming he gets the first-time homebuyer credit I mentioned earlier) I have a sneaking suspicion that we're going to be asked to help with a lot of "elbow grease" and other support.