No one wants to admit that they’re putting their financial security at risk because they’re indulging their kids. And yet, it’s something normalized for many parents.
“One common issue I’ve seen is parents prioritizing their child’s current lifestyle over their future retirement security,” said Ben Klesinger, founder and CEO at Reliant Insurance Group and Helping Hand Financial.
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He said parents are often unaware that excessive spending on non-essentials for their kids, such as extravagant activities and gadgets, chips away at their retirement savings.
“For instance, I’ve advised clients who had multiple luxury vehicles for their teenage children,” Klesinger recounted. “They could have added that money to their IRAs or other retirement accounts, which would have compounded over time, significantly boosting their future retirement income.”
Below are more signs you’re spoiling your kids and jeopardizing your long-term future security.
Using Retirement as a ‘Safety Net’
“A hidden sign is relying on your retirement funds as a backup for your kids’ future financial setbacks,” said Adam Garcia, finance expert and founder of The Stock Dork.
He said this mindset, where you assume “I’ll help them out if needed,” can drain your savings.
“Instead, prioritize building your own safety net while helping them build theirs,” Garcia explained.
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Forgoing Financial Education in Favor of Financial Assistance
“If you’re quick to cover every expense without teaching budgeting basics, you risk fostering dependency,” said Garcia.
“Teaching kids the value of saving and delayed gratification is an investment that ultimately protects your retirement, sparing you from bailing them out later.”
Overextending To Match Peer Lifestyles
According to Garcia, parents often will match spending to align with their kids’ peers, covering costly clothes, gadgets, or events to help them “fit in.”
“This quiet peer pressure can eat into your future funds, with little long-term value for your child’s well-being.”
Letting Kids’ Future Careers Drive Your Spending
Investing heavily in hobbies with the hope they’ll “pay off someday” is risky, Garcia warned.
“From expensive training to unique skill programs, betting on an uncertain outcome can jeopardize your financial stability if those career goals shift,” he added.
How To Shift from Over-the-Top Spending on Your Kids to More Conscious Planning for the Future
“One of my clients, an expat working abroad, came to me with a classic dilemma: They were deeply invested in providing every opportunity for their two kids, from elite private schooling to pricey extracurricular activities across several countries,” said Josh Katz, certified public accountant (CPA) and founder of Universal Tax Professionals.
He explained that each year, they’d add more to their expenses — private tutors, summer camps, the latest tech gadgets, and regular travel back to the U.S. to visit extended family.
“However, when we looked at their retirement plan, it became clear they weren’t contributing nearly enough to support a comfortable retirement overseas or back in the States,” Katz said.
“Through our conversations, I helped them see that their dedication to their children’s success was admirable but not sustainable if it meant sacrificing their own financial security.”
After some careful budgeting, Katz said they began balancing their priorities, making more modest choices for their kids while increasing their retirement savings.
“When they shifted from over-the-top spending on their children to more conscious planning for the future, they found a way to secure their well-being and provide meaningful support to their families,” he remarked.
“It was a rewarding turnaround, reinforcing the importance of balancing immediate family expenses with long-term goals.”
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This article originally appeared on GOBankingRates.com: 4 Signs Spoiling Your Kids Is Jeopardizing Your Retirement
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