One of the biggest impediments standing in the way of retirement for today’s baby boomers is their children. Everyone knows that cost of raising a kid is high, but what’s holding many parents back is the cost of their kid even after they are raised. Ameriprise Financial surveyed a group of these baby boomers and found that over 90% admit to providing financial support to their grown children. Over half of them have allowed their kids to move home and live rent free while 71% have helped their kids pay for college. This doesn’t include all of the parents still dishing out for car insurance, cell phone bills, health insurance, and so on. It’s a parent’s basic nature to want to support their kids, but there comes a time when it’s best for both sides to cut the umbilical cord and create some financial independence.
50% of the paycheck goes to needs, 30% funds your wants, and 20% should head to savings.