You could end up spending a lot more in retirement than expected if you lend money to your children. “I know that it’s very difficult to say no to our kids,” Frankle said. “But if you are going to help them out, you have to do so judiciously.”
If you’re not careful, you could run out of money. “I have a number of clients who were forced back to work because they didn’t put a limit on the support they provided to their kids,” Frankle said.
Having a solid financial plan will help you understand the risks of raiding your retirement savings to help your kids. “Your retirement security depends on the balance you create between your retirement income, assets and spending,” Frankle said. “If you spend down your assets by making loans to the kids, you might not have sufficient assets to create the income you need to stay retired.”
You’ll realize this if you have a plan, he said. Without one, you’ll have trouble establishing boundaries when it comes to your kids’ requests for money.
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