It seems like the bad news about our retirement prospects just keeps on coming.  According to a U.S. Census Bureau report just released, the median level of debt among households led by someone 65 and older more than doubled over the last decade from roughly $12,000 to $26,000.  This increase was the biggest among any age group and further raises concerns about the financial health of older Americans.  Adding fuel to the fire is a recent report by the AARP’s Public Policy Institute which revealed that Americans over the age of 50 carried substantially more debt on credit cards than those under 50.  While much of that debt is tied to medical expenses, Carmen Wong Ulrich reported in the New York Times that a significant number of seniors report having given money to or having paid the debt of relatives, which added to their credit card balance.

As a financial planner I understand this well.  I once had a client that had extracted all the equity out of her home in addition to having run up a fairly sizeable credit card balance in order to send her children to private school for 12 years.  And there are many parents who feel that they have to do everything short of selling their home in order to finance their children’s college education.  Many of us truly want to continue to financially support our children even after they’ve left the nest, through gifts and other demonstrations of our love and affection.  Or possibly because of guilt.  Regardless, what impact does this have on our finances?

Have you ever paid attention to the admonition during the pre-flight instructions on a commercial aircraft: ‘If you are travelling with a young child, please first put on your own oxygen mask before helping your child.’  The same is true with your finances.  Every dollar you contribute to your children – whether as minors or as adult – is a dollar less to use for your own future expenses.  It’s important to make sure that your own retirement is protected before attempting to take care of your children or other family members.  That said, what are some ways to avoid putting your retirement at risk for the sake of your children?

Probably the most important thing you can do is to create a retirement plan for yourself or your family.  The plan should identify everything you want to do for the rest of your life, the priority of each goal, and the cost of each goal.  As I’ve written in a previous article, once you have such a plan, it becomes much easier to identify whatever tradeoffs you might need to make in order to give money directly or indirectly to your kids.  You can even compare scenarios with and without that college loan you are taking out for your child or that $50,000 wedding for your daughter.  Once you can quantify how much you are sacrificing, it becomes a lot easier to resist if necessary.  You’re not being selfish if you really need the money to support yourself either right now or in your future.

Another approach is to focus on your values rather than on your money.  Helping your children in ways other than financially can be even more rewarding than focusing on material things.  They are your children, after all, and you presumably not only know them well but also what’s important to them.  Helping them get jobs, find places to live, and coaching them in learning about how to navigate our complex society are some inexpensive yet valuable ways to show that support.

Think also about the impact of your own financial future on your children.  What would happen if you were to put yourself in a position of having to move in with them or require their financial support when you become older?  If you think about it, you’re actually helping your children by ensuring you do not become a burden on them later in your life.  That’s a pretty valuable gift!

We all want to do the right things for our children.  But putting yourself at financial risk is not a good strategy.  Always keep that in mind when opening that money spigot.