For many of our clients, the generosity and level of support they have provided to their children (and grandchildren) over the years can’t be overstated. But, oftentimes, this support has made a significant, negative impact on their own savings.
Sitting around a client’s kitchen table yesterday, I asked her if she and her husband intended to leave their home to their two children. I’ll paraphrase her response: “They’ve already received their ‘inheritance’.” She went on to explain how she and her husband had financially aided their children long after they were adults and on their own. I had never heard the point made so clearly, and it made sense.
Does any of this “inheritance” sound familiar?
A cosigner for a student loan
A place to live during the Great Recession
Help on a downpayment for a car, or even a home
An alternative to expensive daycare
So, when it comes to retirement, the savings you would have kept for yourself has been spent—and not on extravagant “nice-to-haves” but loving and necessary gifts to your children. This incredible support parents and grandparents provide along the way is a big, if not the biggest, part of the legacy they leave behind.
Sitting at my clients’ kitchen table, what they were needing most in retirement was a way to reduce their monthly expenses,maintain their standard of living, and have a little cushion to cover the "unexpected medical bill"—all while staying close to family. It seemed unfair that they should have to tighten their belts at this point in their lives after giving so much. Thankfully, by tapping into their largest asset, their home, they likely won’t have to.