When I was a financial adviser several years ago, I had a client named Max -- a business executive in his late 50's who was looking forward to retirement. But Max had two issues that were thwarting his peace of mind. The first was his adult son Alex's inability to attain financial independence. The second was his wife's refusal to stop helping their son out. "It's threatening my retirement plans and my marriage," he told me.
Max had a good reason to be frustrated. After a prolonged, expensive film school education, 30-year-old Alex drifted between part time jobs in Los Angeles, balancing a robust surfing schedule with an active nightlife. But to Max, it didn't appear that Alex's lifestyle was impeding his ability to make ends meet -- until he discovered that his wife was secretly sending Alex a fair sum of money to help with rent and other expenses. Worse yet, the cash was coming from a savings account that Max had earmarked for retirement. He was furious, saying he didn't know if he was more upset with his son's irresponsibility or his wife's deception. Because support like this is becoming increasingly common, so are potential disputes.
So at what age do your children outgrow the need for financial help? It may be older than you think. Recent research indicates that a whopping 93 percent of Americans who are a part of the baby boomer generation have provided some sort of financial help to their grown Gen X or Gen Y children. While many feel good about helping their kids through tough times, couples do not always see eye to eye on how much support is appropriate and under what circumstances.
So what can you do if you and your spouse disagree on if -- or how -- to help your struggling adult child with their finances?
- Discuss the situation together. Talk openly about the reason your child needs financial support and determine if it's a true need, or the result of immature or irresponsible behavior. If your child is being conscientious but needs some help, decide in principle if you agree that financial help is appropriate. Keep in mind that this conversation may expose a difference in opinion about the definition of a need or irresponsible behavior. If this is the case, work to find a compromise that both you and your spouse are comfortable with.
- Work with your spouse to asses any risk to your own financial goals. If your child needs help with one month's of utility payments or an unexpected car repair, coughing up the cash to help may put a strain on your immediate plans but likely won't threaten to derail your retirement goals. But if he or she is moving home for an indefinite amount of time or needs help with monthly student loan payments, calculate whether this will delay or affect your retirement. If you ultimately decide to help, come to an agreement with your spouse about the absolute amount and timeframe so that neither of you will feel like your retirement plans are threatened.
- Don't cheat. Sneaking money to your child after you've agreed not to do so is a recipe for marital strife. If you disagree about helping your adult child financially, rather than hiding help from your spouse, negotiate a middle ground.
If you are having trouble talking through the situation or determining how much support you can afford, consider consulting a financial adviser or other professional. Sometimes a neutral third party can help you make an objective assessment of the situation and also help communicate your decisions to your family members.