How much help for young adult children?

[anothercog]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant). They are almost certainly helping their two other kids with rent too. If not for these expenses, I'm quite certain they could afford to retire.

This got me thinking about how much help I should anticipate giving my children in their young adult lives. It is unlikely they will be able to afford a house nearby without some significant help. However that could derail my early retirement dreams.


Curious how much others have earmarked for helping kids launch and how you balance that with early retirement.

 

[bloom2708]

In a super HCOL area, all bets are off.

I believe you help in a manner that does not put your retirement in peril.

We will help our adult kids (oldest is 21) as needed. We will not have the ability to give hundreds of thousands for a house down payment.

You just can't tell anything these days, so best not to guess. Your neighbor might have $25 million in his taxable account and this down payment help is a fraction of his savings.

Buying right now in the Bay Area is crazy. But, it might be a good decision if that house is worth $4 million 5 years from now.

 

[TheRunningMan]

When I was 24 or 25, I could not afford a home near my parents, so I worked hard and rented until I could afford a small home. While things were tight back then, it made me hungry to improve my situation. If my parents had given me a bunch of money to get started, it would have been awesome but I fear that I would not be where I am now.

With my kids who are mid to late 20s now, I counsel them on career, life balance and savings for goals. I will follow my parents' lead and let my kids achieve for themselves.

Of course, down the road, whatever is left will be theirs and I hope they will pass on the legacy of letting the kids drive their own achievement.

Cheers!

 

[copyright1997reloaded]

They should help them move to an area with reasonable housing costs.

 

[mpeirce]

They should help them move to an area with reasonable housing costs.

+1

A HCOL area is a choice.

 

[Philliefan33]

DH has retired in 2010, I retired five years later. We don’t have anything earmarked for helping our two daughters, each married now.

However, our finances are such that we have been able to offer help to each. For the oldest, it was a promise of a loan from the Bank of Mom & Dad if she needed to cover an unexpected expense between the time she settled on a house and rebuilt her emergency fund.

For the youngest, we have loaned her money to pay for graduate studies. It’s a win/win: the interest rate is less than she was offered through the school but more than we were earning on the cash in our savings account.

 

[jazz4cash]

I’m not big on helping adult children, but being in a similar situation I am reconsidering. Somehow I’m thinking a starter home doesn’t have to be 1500 sq ft or cost 1.8M everywhere in the Bay Area. I’d find a way to help with down payment if I could do so without jeopardizing my own situation or maybe consider equity sharing. In my case I’m also thinking of helping DD buy a rental property in a less expensive area just to get her feet wet. I wouldn’t buy in the current market if I could wait unless I had piles of dough to blow.

 

[RetireeRobert]

You are not obligated to jeopardize your retirement dreams to help your young adult children buy houses. You already got them to young adulthood, now let them be adults! As others have already noted, if housing is too super expensive out of reach where they live now, you can help them relocate to where they can afford to buy homes, IF home ownership is their absolute number one desire. Otherwise, let them save and scrimp and delay other gratifications for it---or decide home ownership is not the end all and be all of their young adult lives.

 

[anothercog]

I’m not big on helping adult children, but being in a similar situation I am reconsidering. Somehow I’m thinking a starter home doesn’t have to be 1500 sq ft or cost 1.8M everywhere in the Bay Area. I’d find a way to help with down payment if I could do so without jeopardizing my own situation or maybe consider equity sharing. In my case I’m also thinking of helping DD buy a rental property in a less expensive area just to get her feet wet. I wouldn’t buy in the current market if I could wait unless I had piles of dough to blow.

For my neighbors it was about opportunity to have their daughter live close as houses in this neighborhood have little turnover. I doubt they'll get it. It's going to be a massive bidding war. The agent gave out more than 60 disclosure packets.

I considered bidding on it too with my parents but they couldn't wrap their heads around the price tag and couldn't make a decision by the bid deadline. it would have been great for them to live in and then leave it to my kids but this market is too hot right now.

 

[SnowballCamper]

Already retired. Tuition is already paid for kiddo at the state school. DW says kiddo can live at home as long as she wants (she's only 14 now). I can see providing support through college, and some grad school if grades are good and in a professional type field. The first home or apartment is on her own.

 

[anothercog]

Already retired. Tuition is already paid for kiddo at the state school. DW says kiddo can live at home as long as she wants (she's only 14 now). I can see providing support through college, and some grad school if grades are good and in a professional type field. The first home or apartment is on her own.

When the kids were younger I was pretty adamant that I wanted them all out at 18 but as we get closer to that date I have softened that quite a bit. I'm okay with one of them living here in young adulthood, just not all three of them. Our house isn't big enough but I would like a live-in house/pet sitter so we can travel.

 

[spanky42]

what kind of salary and credit rating does a 25 YO need for a loan that size? I'm from MI so well out of the loop on that, but I can't imagine buying a house for that much unless I'm pulling in 400k minimum.

 

[bolt]

$0.00 worked well in hindsight.

Initially told I was OUT or paying rent throughout schooling past HS, I chose to pay rent. My day was 6am to 10pm, school 7-1, gym 2-4, work 4-10pm. Im doing well, despite enormous & crippling health issues.

The other sibling didn't leave the nest till 47yrs old and was essentially kicked out. They're now distressed.

Teaching a man/woman to fish asap comes to mind.

Good luck & best wishes...

 

[disneysteve]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant). They are almost certainly helping their two other kids with rent too. If not for these expenses, I'm quite certain they could afford to retire.

But is that their priority?


I learned long ago that everyone is different. Some people want to retire as soon as possible. Others are happy to work until 65. And still others plan to keep working as long as they are physically and mentally able to do so, and it's not because they need the money. Our old family doctor was quite wealthy and continued seeing patients right up until his death at 94. He loved every minute of it and wouldn't have had it any other way.


Also, every family situation is different. Our daughter is 25. She is very intelligent and graduated college with honors, but she also suffers from significant mental health challenges that greatly impact her work abilities. She still lives with us and probably will long term. She's working, but not at a "real" job and not making enough money to support herself independently. Currently, we don't give her much money but we do provide her housing and food and stuff. She owns her car. She paid off her student loans. She pays us a couple hundred a month in "rent". And she covers a lot of her own expenses (and funds her Roth and other savings), so we're not giving her a free ride, but we do help some. Fortunately, I make enough and we're frugal enough that we can do that and still fund my retirement adequately. As long as she is doing her best and doing the right things, I don't feel that we're enabling her in any way.

 

[anothercog]

what kind of salary and credit rating does a 25 YO need for a loan that size? I'm from MI so well out of the loop on that, but I can't imagine buying a house for that much unless I'm pulling in 400k minimum.

There is no way she has the income fit this even if gifted a 20% down. Parents are almost certainly on the hook for the loan.

 

[Dtail]

We have 5 children between us and so far no true successful results from a financial perspective, so as a general concept we don't help out or we would start feeling the effects of some financial stress.

 

[travelover]

Yet another reason to keep the kids thinking we are just scraping by.

 

[RobbieB]

My parents put me through school. That worked well. I did the rest.

 

[Dash man]

We own the townhomes each of our two sons live in with their families. One moved into a former rental property after they had twins and were struggling enormously. The other was living across the country, but wanted to move here to be closer to us and for the support network family provides. They couldn’t make it work where they were comfortable financially to make the move. So we provided an incentive. We bought a townhouse they only saw in pictures and FaceTime. It was just as real estate was opened up a little from the lockdown. If we hadn’t moved fast we wouldn’t have gotten the place for the price we did. The deal was they pay us a monthly rent to cover the taxes, HOA, insurance, sewer and they pay the rest. They will each inherit the townhouse. We’re happy because the grandkids are all close! [emoji3]

 

[rkser]

This is a topic we often discuss at home.
I am concerned that our help may lesson our son's drive to do well for himself.

We are retired, our parents paid for our college, we invested in 529 plans for both kids, which appreciated & paid for up till graduate professional school for our daughter & are now paying for son's graduate school. All in all 529 Plans were very helpful.

We graduated from a humble to a middle class lifestyle at present. We often struggle to spend for luxuries for ourselves, due to frugal habits, although now I think we can.
We have won the game so to speak & are fortunate to have a mid seven figure net worth, thanks to the bull market & some good luck. We gift freely to kids & the 529s of grand kids. I think we will leave a sizable (for us) inheritance.

Our daughter is doing very well & did not ask for help when buying her house. Although it remains to be seen, our son may not do as well as his sister & I do not know how I can restrain our gifts to him, as it may raise ill feelings towards us & his sister.
We just hope the money we worked hard for will give him a good start to his career & life & will not hurt his drive to be as successful as his sister & come up in his life.

 

[Teacher Terry]

I helped my kids when they were young and needed it according to my means. The same as my parents did.

 

[anothercog]

This is a topic we often discuss at home.
I am concerned that our help may lesson our son's drive to do well for himself.

We are retired, our parents paid for our college, we invested in 529 plans for both kids, which appreciated & paid for up till graduate professional school for our daughter & are now paying for son's graduate school. All in all 529 Plans were very helpful.

We graduated from a humble to a middle class lifestyle at present. We often struggle to spend for luxuries for ourselves, due to frugal habits, although now I think we can.
We have won the game so to speak & are fortunate to have a mid seven figure net worth, thanks to the bull market & some good luck. We gift freely to kids & the 529s of grand kids. I think we will leave a sizable (for us) inheritance.

Our daughter is doing very well & did not ask for help when buying her house. Although it remains to be seen, our son may not do as well as his sister & I do not know how I can restrain our gifts to him, as it may raise ill feelings towards us & his sister.
We just hope the money we worked hard for will give him a good start to his career & life & will not hurt his drive to be as successful as his sister & come up in his life.

That’s a tough one. My mom already told me I’ll be getting less of any inheritance because I’m the most financially successful of my siblings and step siblings. I’m fine with that, I didn’t earn it and don’t need it. Whatever I inherit I’ll give to my kids.

I recall a line from The Descendant with George Clooney, you want to give your kids enough for them to make something of themselves but not so much they can do nothing.

 

[anothercog]

So I heard that my neighbors bid was successful. It is the house next to mine that was for sale and we wrote a letter to the owner supporting their offer. I’m happy for them, I got a good neighbor but my neighbors have their daughter nearby.

 

[PandaBear]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant). They are almost certainly helping their two other kids with rent too. If not for these expenses, I'm quite certain they could afford to retire.



This got me thinking about how much help I should anticipate giving my children in their young adult lives. It is unlikely they will be able to afford a house nearby without some significant help. However that could derail my early retirement dreams.





Curious how much others have earmarked for helping kids launch and how you balance that with early retirement.

We are also in the Bay Area. We helped our kids out (paid for college, they had a second hand car, etc)

We are currently helping child #2 purchase a condo (with the down payment). It’s a condo that’s about $425K. Having 20% down will help a lot and allow her to avoid mortgage insurance. She has a decent job, is a good person, and I am happy that she’s staying near us. Is that selfish of me? Perhaps, but I don’t care. We’ve also encouraged good financial habits and I think some of them have sunk in. She maxes out her thrift saving program as well as other retirement savings (she puts away about 22%). She’s not in credit card debt. She does spend too much on Door Dash (IMO) but if that’s the worst thing she does financially I think that’s retry good.

We have set aside the same amount for our other two kids....they’re just not at that place in their lives yet. However, they have also listened to us about the importance of saving for the future and are doing so, just like their sister.

We also treat them each Sunday morning to breakfast and pay their expenses for our annual family reunion.

I am happy I can help them and see the benefits of it while I’m alive.

I think what you do and don’t do for your kids is a personal thing. I don’t think intrinsically that providing some help will make them become slackers. Sometimes kids are grateful and continue to make good choices.

And actually, my dh’s parent helped him out when he bought his first place. He tried to pay them back when he bought his second, but they refused and had him apply it to his new house. My dad did a bucketload of manual labor when I bought my first condo......the improvements were definitely his “sweat labor”. My mom watched the kids when I worked part time, free of charge. So we had help and I think we turned out okay as well.

 

[racy]

... Curious how much others have earmarked for helping kids launch and how you balance that with early retirement.

We planned to pay for two kids' college expenses. We also planned for our retirement. So, we setup automatic 401k investments at a rate that would accomplish our goals. Then, we made sure we didn't ever have credit card debt. It worked out for us: both of these goals accomplished.

We did not plan for post-graduate support. However, we've made "loans" to our sons (with very generous interest rates and payment schedule).