27 Jul Don’t run out of money by helping your kids

Q. I am 84, retired, and financially comfortable. However, I am rapidly draining my resources. I have adult children and grandchildren that I help financially. They are good folks and not wasting what I give them. I just don’t want to run out of money. What to do?
— Grandpa

A. Congratulations on being retired and financially comfortable. This is certainly the goal of any financial plan.

But it is concerning – and unfortunately not uncommon – that you are draining your resources in order to provide a financial lifeline to your children and grandchildren.

You don’t mention their ages, but we’ll assume they’re old enough to earn their own living.

“While it is admirable -and sometimes even necessary- to help our loved ones from time to time, this should not become a way of life for either you or them,” said Timothy Brunnock, a financial advisor and attorney with Trinity Financial Strategies in Morristown.

Your adult family members can work, and perhaps work a second job if need be, he said. You are 84 years old, which would make it a lot harder for you to find new income.

Brunnock said your first priority should be to yourself: to make sure you have enough money to live out your retirement years.

Just think: If your finances are ultimately depleted as a result of your generosity, will your children/grandchildren be able to take care of you? Will they be able to afford to do so?

“Any remaining assets after you pass can certainly be left to your children/grandchildren through your will,” Brunnock said. “I don’t mean to sound harsh, but at this stage of your life, it is not your responsibility to help them cope financially on a regular basis.”

To figure out how to proceed, start by figuring out what your annual expenses are. Then determine the amount of your guaranteed income sources, such as Social Security, pensions and annuities. If there is a shortfall, Brunnock said, you would need to make up the difference by drawing on your investments.

“The good rule of thumb is to never take more than 3 1/2 to 4 percent of your investments each year,” he said.

The second part of the plan is to have each of your children/grandchildren do the same exercise. Perhaps you could show them your plan and share your concerns with them about depleting your resources, Brunnock said.

Brunnock said you and your family will be surprised to see the breakdown of discretionary versus non-discretionary spending.

“Your children/grandchildren should look to you as an example of how hard work and saving will allow those you love to enjoy their retirement years with independence and dignity,” Brunnock said.

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