Achieving financial independence empowering

THIS WEEK’S QUESTION:

Answer: I recently tried to learn to ski — emphasis on “try” — and at first I couldn’t move 5 inches without grabbing the nearest poor soul’s elbow. After a group lesson, I made it to the bottom of the beginners hill without clutching onto another skier. I felt a level of satisfaction usually reserved for Nobel Prize winners.

Independence is empowering, whether you’re learning to ski or paying rent for an apartment you take pride in. There’s value in taking care of yourself: You’ll have the means — and perhaps the confidence — to handle life’s inevitable hiccups, rather than relying on others to bail you out. After all, your parents may not have the cash to help if they need to focus on their own financial security instead.

Becoming financially independent may not happen immediately, and many young adults aren’t there yet: 61 percent of U.S. parents with adult children assisted their kids financially in the prior 12 months, a 2015 Pew Research Center study found. But that doesn’t mean accepting help is always the right financial move for either of you.

FINANCIAL INDEPENDENCE WILL EMPOWER YOU

In the short term, getting help with a cellphone bill or car payment might take the pressure off as your post-college life takes shape. But you won’t get the chance to build crucial budgeting and accountability muscles. You also won’t get the deep satisfaction that self-sufficiency brings, which parents may have to remember, too.

“It’s hard to see your child struggle,” says Andrew Rafal, president of Bayntree Wealth Advisors in Scottsdale, Arizona. “But in some cases, by enabling and providing, it can be a detriment to them.”

Richard B. Jones, managing director of the Jones Zafari Group of Los Angeles, part of the Merrill Lynch Private Banking and Investment Group, works with clients who have $10 million or more in managed assets. He says his wealthy clients’ kids who are financially independent are more responsible and mature, and they feel a higher level of accomplishment and self-worth.

Parental support doesn’t have to be all or nothing; some types of assistance are worthwhile, Jones says, such as education. Your parents may want to pay for your tuition or living expenses in grad school, or for their grandkids to go to private school. “Things that can help children in the long run help themselves” can be beneficial, Jones says, as long as the parents are financially stable.

YOUR PARENTS SHOULD FOCUS ON RETIREMENT

In many cases, your parents may be better off keeping any extra money in their own wallets. Families headed by a person ages 56 to 61 had a median amount of $17,000 saved for retirement in 2013, according to an Economic Policy Institute analysis of Survey of Consumer Finances data. In contrast, the average American age 65 and older — generally, those over retirement age — spent $44,664 a year in 2015, the Bureau of Labor Statistics says.

Before accepting money for a wedding, home down payment or other expense, ask your parents how supporting you will affect them, says Shelly-Ann Eweka, a Denver-based financial adviser at financial services firm TIAA. She suggests asking, “Was it part of your financial plan to help me and my siblings into our adult lives?” and “What financial goal will be affected if you help me?”

Sure, they’ll have Social Security to rely on, but it’s only meant to replace about 40 percent of your parents’ pre-retirement income each year, the Social Security Administration says. And if they don’t have enough supplemental savings, you could end up supporting them. A third of those ages 52 to 70 said they might need their kids’ financial help in retirement, according to a recent study conducted by Merrill Lynch in partnership with Age Wave.

Your parents can use a retirement calculator to see how much they’ll need when they stop working. They can also talk to a financial planner to make sure they’re on track.