From yesterday’s New York Times, page B1:
“It’s a gift we can give them now,” said Mrs. Riccardi of Hillsdale, N.J. “If we can bite the bullet now, it will help them later.”
This gift is not a couple of $20 bills tucked into a holiday or birthday card. It is more like an allowance that extends past adolescence, often into the 30s. It pays for housing, bills and other expenses. In fact, research shows that financial strings to the parents’ wallets are never really severed.
And this has financial specialists, researchers and sociologists on the fence. Some people argue that repeated parental handouts cause children to reach financial maturity later in life than they should. Others say that in the long run, parents actually give their children a leg up.
But this head start could cause a setback for many parents. Though paying a child’s rent might not break the bank, over time, it can slowly chip away at the parents’ retirement fund or leisure money.
“The sooner parents cut off ties, the sooner they learn to do it on their own,” said Suze Orman, financial columnist and author of the book “Young, Fabulous and Broke.”
The common practice of ending financial obligation after their children graduate from high school or college is gone. Parents are carrying their children longer, pouring in thousands of dollars a year ”” if not tens of thousands ”” to their college graduates.
Thirty-four percent of adults 18 to 34 receive financial assistance from their parents, according to a study by the Institute of Social Research at the University of Michigan and published in “On the Frontier of Adulthood.”
During this time parents can expect to pay on average $38,340 helping their children transition to adulthood. That is roughly $2,200 a year.
“While parents are more able, than in the past, to provide assistance ”” some are overextending themselves,” said Robert F. Schoeni, an associate professor of economics and public policy at the University of Michigan and a co-author of the study.
This is all too true, as my wife and I discovered. In our case, however, it was our married daughter who tapped into the “bank account ” several times……without repayment, and we finally had to tell her that the “bank” is closed and out of business. Permanently!
on hte other hand, it’s one way to avoid the inheritance tax of over 60%!
Better from a warm heart than a cold hand.
As we come close to the end of certain things (one of us age 83, the other almost 77) we are retired and living on pensions. As a result when our children and some grandchildren are now married, we have learned years ago to say no to any cash handouts. I will not go into detail of the sacrificies that we made and we learned to do without certain things that our youngsters just had to have even if they went into debt for them. Nuff said!