Money Management

Debate: Helping the Kids vs. Saving for Retirement

As a parent, it’s only natural to want to help your children. Whether you’re saving for their college education, helping with a home purchase, or paying off some of their debt, you may want to reconsider how much you help your children financially.

Will your kindness mean that you won’t have enough money to meet your needs? It may sound selfish, but putting your retirement first may be a better choice for the years ahead.

Retirement today is different than it used to be. Just a generation ago, a 20-year retirement was considered to be lengthy. Today, you may be planning for 30 years. With pensions disappearing, retirees living longer, and medical costs rising, saving for retirement has taken on a new meaning to avoid outliving your money.

Helping your children instead of saving for your future may impact your retirement in a number of ways:

  • Time value of money— over time, the money in your retirement account can grow tax-deferred while accumulating interest in order to create an additional stream of income.

  • You may need to delay your retirement a number of years to draw a larger amount from Social Security if you haven’t saved enough.
  • While some expenses in retirement may be less, not saving now may mean fewer dollars for basic expenses. You don’t want to rely on your children for help when you retire because you made the decision to help them now.

Finding the Balance
There are many considerations to finding the right balance between helping your children financially and being smart about saving for your retirement. Are the investments you currently have appropriate for where you are in life? Your portfolio should reflect the proper types of investments based on your specific needs, risk tolerance, and plans for the future.

You can borrow money to help your children but you can’t borrow money for retirement. Student loans can be paid off over many years, but saving for your retirement is time sensitive. While you may not want to see your children taking on debt, you also don’t want to depend on them for help in retirement.

Planning and prioritizing now can help you enjoy the present while saving for the future. Budgeting for current expenses and spending wisely can give you more options for helping your children and living well down the road.

Begin by making your retirement a priority and then move forward in living for today.

The Orange County’s Retirement and Investment Services team can help you figure out how to share with your children while still saving for retirement. To learn more, contact us at (888) 354-6228 ext. 7599 or visit us at