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From the moment your children are born, there are costs associated with raising them. The diapers, the clothes, the food, the toys — the list goes on.

And the costs don’t stop coming as your children grow up. It makes sense for you to try to take some steps that can minimize the risk of your children ruining your retirement savings strategy. That’s exactly what The Motley Fool discussed in its article “How to Childproof Your Retirement.”1

The article looks at several different issues that parents encounter when it comes to their personal finances and their children. The first issue deals with the fact that many parents are choosing to help their children with college instead of saving for their own retirement. A recent Merrill Lynch survey2 shows that 75% of parents put their children’s financial needs ahead of their own retirement.

Among the ways that this happens is by parents trying to pay for their children’s college tuition and education-related expenses. Some parents even take out student loans in their own names to help cover some of the costs. The irony here is that when parents take on debt, they could be delaying a financial burden that will eventually fall to their children.

By not preparing for retirement, or by incurring debt they can’t pay off before they pass away, they may be simply passing that debt onto their children later. There are other funding options available for college like scholarships and financial aid. You can also open a 529 Plan to help your child save for college.

If you’re not familiar with these type of plans, 529 plans are tax-advantaged plans that are specifically designed to help with education expenses3. There are two types of 529 plans: savings plans and prepaid tuition plans. The prepaid tuition plan allows an investor to pay for fees and tuition at the specific institution. The other type of plan, the savings plan, is like an individual retirement account or IRA and has tax advantages as well.

If you find yourself retired with too much debt or are unable to repay the student loans taken out in your name, your options could be limited. Parents may want to consider working with a financial services professional to examine all options.

Another issue when it comes to parents, children and finances is setting limits on the amount of financial support provided. Retirees often live on a fixed income. Many utilize a monthly budget to keep track of expenses and cash flow. Financial support to your children should fit within that budget. Just as it is useful to set a limit on what you’ll spend on entertainment, utilities, travel or groceries, it’s important to limit your financial support to a reasonable amount for your budget.

Having discussions with your children as they grow up and into adulthood can ensure they are financially literate and you are setting expectations for what they should expect from you — and, perhaps more importantly, what they shouldn’t.

Working with a financial services professional to solidify and define your personal financial plan can also help. With a financial strategy in hand, empowering your children with personal finance skills and setting appropriate limits on financial support for their personal and education expenses, you can begin to childproof your retirement.

1 https://www.fool.com/retirement/2019/09/04/how-to-childproof-your-retirement.aspx

2 https://www.ml.com/the-financial-journey-of-modern-parenting.html

3 https://www.investopedia.com/terms/1/529plan.asp