Kids Are Terrible for Your Retirement

If you want someone to look after you in your golden years, here’s some financial advice that is probably going to get some people upset.

Don’t have children. Just buy long-term care insurance.

It’s a lot cheaper. And you have some assurance it will actually turn up when you need it. Every state has an insurance regulator that does its best to keep insurance companies honest. But there are, as yet, no regulators for kids.

This week, a survey from confirmed what has already become an open secret in middle-class America: Moms and Dads everywhere are plundering their meager retirement savings to support their adult children.

About half of parents surveyed said they were sacrificing their own retirement savings to help their adult children. A third said they were sacrificing their savings somewhat, and 17% said they were sacrificing them “a lot.”

And those retirement savings were already looking desperately thin. The Employee Benefit Research Institute, an independent think tank, estimates about two-thirds of those aged 35 to 64 face a shortfall in their retirement savings.

It’s a further sign that having children, far from being a source of security in your old age, may be a risk instead.

“When it comes to finances, children are a liability,” James Gambaccini, a financial planner in Reston, Va., tells Barron’s. “They always have been.”

Sandra Sable Gilpatrick, a financial planner in Boston, calculates that for a single $212,000 premium, a 40-year old woman could get a whole life policy with generous coverage for long-term care: $1.2 million in insurance over her lifetime on day one, and $3.3 million by the time she’s 80.

Compare and contrast that with the cost of children.

Raising a single child to the age of 17 costs about $233,000, according to U.S. government data. And that’s not counting the continued drain after they turn 18.

Too cynical? Possibly. The main reason for having children isn’t to have financial security in your old age. On the other hand, it’s an illustration of what you’re giving up.

Financial planners, meanwhile, say parents need to stop putting themselves at risk for their adult children in this way. “Parents today are to blame,” says Jon Ten Haagen, a financial planner in Huntington, N.Y. “They have coddled these kids to the point of complete dependence on Mom and Dad…. STOP, and let your kids grow up to be self-sufficient.”

Raymond Benton, a planner in Denver, agrees. “Pay yourself first,” he urges.

This way you may not have to spend your golden years resenting your children—and working as a greeter till you’re 80.

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