Setting financial boundaries for grown children

Often reporters will ask members of the Financial Planning Association for a quote on risks retirees face.  Sure, inflation, medical expenses, lower than expected returns are old favorites, but my answer is typically this:  The biggest risk to some retirees is their grown children.


If adult children of retirees are in the habit of coming to First National Bank of Mom and Dad to rescue them from unexpected expenses (car repairs, must have the new iPhone, credit card debt, etc.), that Bank’s retirement could easily be in jeopardy.


Here’s an example


Take an example of Betty and Bill, retirees who wisely went to a financial planner before retirement.  Bill and Betty know that their safe spending amount is $50,000/year.  This is a comfortable amount to support their household needs, hobbies, and a vacation every year.


However, they routinely give their kids $5,000/year in unexpected help.  This is a 10% overage from their safe spending amount.  Yikes!  Bill and Betty’s financial advisor is worried.  But, how to stop a family pattern that’s been going on for decades?


What are some good ways to tell your children the Bank is closed?


Here is some sample language I made up or found on the Ye Olde Intyrnette.


  • “My financial advisor told me that if I continue these gifts to you, I will be out of money by age 80. Would you rather me bail you out now or life with you for the last 15 years of my life?”
  • Make it a rule – “Dad and I promised we would not bail our kids out of financial problems after the age of 30 (or whatever you pick).”
  • Ask pointed questions about why they cannot cover this financial need themselves. This is not the same as saying “no,” but could make the ask so difficult as to not become a habit.
  • Offer other ways to give. “We are living on a fixed income and can’t afford to give you money now that we are retired.  However, if we can watch the kids for you and save you some babysitting money twice a month, we’d be happy to help that way.”


Whatever language you use, reply promptly, be polite, have a consistent answer among siblings, and be clear without leaving room for misinterpretation.  Don’t apologize – an adult’s bad money choices are not your fault.


Share this post