Not many retirement suggestions raise more eyebrows than suggesting that your children could be a significant part of your retirement plan. But let me explain why the idea isn't as crazy as you might initially think.
You pay for them, and then they pay for you. Though some families adhere strictly to the mantra of "once you are 18, you are on your own", the reality is that many parents and children will continue to help each other out whether they explicitly set out to do this from the beginning or not. When the children are young, you provide for them. When you are older, they spend money to take care of you. Think of it like savings, where you are paying into a system that will pay dividends down the road.
You'll actually forge a closer relationship. Obviously, the important values you teach your children early on are crucial. While there will always be exceptions, many kids you spend time and money taking care of will feel loved and reciprocate by being there for you at your old age. This is especially true when children are older because they will then have the mental capacity to realize that you are helping them financially because you love them and care, not because you somehow owe them.
The key is to be open with your children. Let your children feel like they are part of the team, and that you will help them whenever it makes sense. If you cannot or are unwilling to help, talk to your child and explain your reasoning so they can understand the situation. The worst move you can make is to just say no without providing any reasons, because your child may develop resentment due to a lack of understanding.
Making a long-term financial plan Including your children. Whether it's estate planning, gifting, or your investments, you can save a lot of money on taxes by thinking about the two generations as a whole instead of in isolation. While you might not directly reap the financial rewards of passing on tax-free money to your heirs, you will do them a huge favor that they will truly appreciate. Think of it this way, wouldn't you really appreciate it if your parents did the same for you?
Retirement is much more than just money. A comfortable retirement requires so much more than just having enough money. The love, joy, and company of your children is worth much more than any amount of money can ever provide. Your children are an asset that rewards you far beyond any financial calculation ever will, and you will appreciate them more the older you are. You and your children are emotionally linked forever, but only if you choose to embrace the connection. Include them as part of your retirement plan, and you'll reap rewards far beyond the dollars and cents.
David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.