Do You Give Money to Your Grownup Kids?

I had dinner with some friends the other night. Their younger daughter graduated from college last May. She'd been an average student and didn't have any interest in continuing her education. She just wanted to get a decent job and start experiencing life. However, like most of her friends, she could not find a career track job. So she went to work as a barista at a coffee shop.

Life is tough for recent college graduates. I commiserated with my friends and wondered how they like having their daughter back home.

Oh, no, she isn't living at home. She rents an apartment with a friend. The parents help her out by paying part of her rent, and since she can't afford a car, she's using her dad's Toyota, and by the way, she's been stopping home for a free dinner about twice a week.

How is my friend coping without a car? He said he doesn't mind. He works at home a couple of days a week, and when he has to go to the office, either his wife drops him off or on nice days he rides his bike.

Later, I couldn't help but wonder: How long do people think they have to support their kids, and at what point do parents stop spoiling them?

Then I realized, I have two 20-something children. They are both now out of college, they're both still single, and they both have fulltime jobs. But neither one makes much money -- about enough to pay their rent with a little left over for incidentals, so it doesn't bother me to help them out financially.

I do not pay their monthly rent or supply them with a car. But I do pay my son's cellphone bill (it's cheaper to have him on my account than for him to pay separately) and I pay for his fitness club (because I want him to be healthy); and I pay for maintenance on my daughter's car (because I want her to be safe).

Can I afford to help them out? Yes. Does it mean that I have to cut back on a few expenses of my own? Yes. And does it sound like I'm making excuses? Okay, yes. But I don't really mind that much.

I recall the words of George Clooney in last year's movie The Descendants. He reflected that he felt lucky he could give his kids enough money so they could afford to do what they wanted - but then reminded himself that he shouldn't give them so much that they could afford to do nothing.

Of course, in the movie George Clooney plays a lawyer who's the trustee of an old Hawaiian family sitting on a fortune in real estate, while I'm the descendant of European refugees and my real-estate holdings involve a tract house in the suburbs. Nevertheless, I get what he means.

According to a recent survey by Ameriprise Financial, an investment firm headquartered in Minneapolis, my friend and I are not alone in offering money to our kids. "Nearly all Boomers surveyed (93%) say they have provided some form of financial support to their adult children," says the report. A large majority of Baby Boomers have helped their children pay for college and allowed them to move back home and live rent free. Many of us also help our kids by keeping them on our health-insurance plan and subsidizing basic expenses like rent, utility and car payments.

The survey showed that a lot of Baby Boomers are also helping their parents, which puts them in double financial jeopardy. The result? Many Boomers have stopped saving for their own retirement. Ameriprise reports that only one-third of Boomers say they are growing their savings, a significant decline from the 2007 study indicating 44 percent were adding to their nest eggs.

In the opening of the current HBO series Girls (Season 2 starts in January) the parents of main character Hannah arrive in New York to tell their 20-something that they will no longer be sending her a monthly allowance. Hannah begs them to reconsider, but her mother stands firm, saying they had worked hard for their money and deserved a comfortable retirement.

So are you going to be like my friend, or like Hannah's mom? Either way, we need to open up a discussion with our adult children about how they can manage their own finances more effectively. We need to talk to them about the limits of our financial support. And we shouldn't let pressure from our kids, or our impulse for generosity, hurt our own retirement plans. As parents, we must recognize that at some point it's time to let go -- and that sometimes we have to say no.