In a recent article titled “The Roadblock to Retirement You Didn’t Plan On” we discussed the issue of parents continuing to provide financial support to their adult children longer than expected. Since writing the article, we came across an excellent article in the Journal of Financial Planning (October 2009 issue) that addresses the issue in more depth.

Titled “The Emerging Adult and the Financial Planner – Seven Years Later”, the article was written by Eileen Gallo, Ph.D, a psychotherapist who works with individuals and families dealing with issues related to money. Eileen had written an article seven years ago in the Journal, hence the reference to “Seven Years Later” in the title of her current article.

Eileen states in her article that “the phenomenon of extended adolescence has been recognized by psychologists as a ‘distinct new period of life that will be around for many generations to come’”. She quotes Jeffrey Arnett, a research associate professor at the University of Maryland, who calls this new period “emerging adulthood”. She says that based on Arnett’s research, this new period typically lasts until age 26.

Eileen stated that in her earlier article she emphasized that parents need to “understand that adult children continue to need emotional and psychological support” and suggested that parents focus on giving advice rather than directions to adult children.

In the current article she discussed five areas “in which financial assistance tends to fuel independence rather than prolonging independence.”

They are:

(1) Partial College Funding – Eileen says that while many parents fund 100% of educational expenses, “professional and anecdotal evidence suggests that the educational experience may take on more meaning for some emerging adults when they make even a nominal contribution to the educational costs.”

(2) Vocational Testing – Eileen states that emerging adults will do better “when they are pursuing a career that matches their innate abilities. She recommends the Highlands Ability Battery vocational test.

(3) Help Where Needed: Eileen says that paying for healthcare “does not make the emerging adult feel dependent”. Sometimes, she says, psychotherapy and rehabilitation are necessary.

(4) Help With Business Start-Up – Eileen says that if the emerging adult is planning to start a business, parents should consider helping fund the creation of a business plan and possibly provide seed money.

(5) Be Explicit About Terms of Help: Eileen says that if you provide financial support and expect certain conditions to be met, make sure you are explicit about them. If your conditions are merely implicit, it could lead to a misunderstanding and deterioration of your relationship.

While these ideas may not eliminate the need or desire for Mom and Dad to put out more money for their adult children, they could certainly help minimize the need. Approaching your adult children’s need in an intelligent way can help reduce this unanticipated roadblock to retirement.

For more info about Eileen Gallo’s work, visit her web sites: www.fiparent.com and www.galloinstitute.org