Legacy vs. Lifestyle: Protecting Your Retirement While Supporting Your Family

Many retirees find themselves walking a fine line between helping their family today and preserving their own financial security for the future. Whether it’s contributing to a child’s down payment, helping with college costs, or offering ongoing support, generosity can quickly collide with the realities of fixed retirement income and longer life expectancy.

While family support can be meaningful and fulfilling, it’s important to find balance. The right approach allows you to give in ways that help your loved ones without putting your own stability at risk.

The Growing Trend of Financial Support in Retirement

According to a Pew Research Center study [1], a majority of parents with adult children ages 18 to 34 (59%) say they provided some form of financial help within the past year.

The most common types of support include help with household expenses (28%) and cell phone or streaming bills (25%), while smaller portions of young adults received help with rent or mortgage payments (17%), medical costs (15%), or education-related expenses (11%).

Interestingly, parents across all income levels are giving, but the financial strain isn’t evenly felt. While most middle- and upper-income parents say this assistance doesn’t significantly affect their finances, about half of lower-income parents (49%) report that helping their adult children has at least somewhat hurt their own financial situation.

For many retirees, this kind of ongoing support can be deeply fulfilling but it also highlights a growing challenge: balancing generosity toward family with maintaining long-term financial security.

The Risk of Draining Retirement Savings

Once you enter retirement, your income sources often become fixed, while your expenses continue for decades. Large withdrawals or gifts can have long-term consequences that aren’t immediately obvious.

Here are a few key risks to consider:

• Reduced cash flow: Every dollar spent on family assistance is one less available for everyday living, healthcare, or emergencies.

• Lost growth opportunity: Withdrawing money early can mean missing out on potential compounding investment growth over time.

• Longevity risk: People are generally living longer [2], which means retirement may last several decades. Failing to plan for this possibility could increase the risk of running out of funds.

• Sequence of returns risk: Taking large withdrawals early in retirement can magnify the impact of market downturns, permanently reducing your portfolio’s ability to recover.

Helping your family may feel right in the moment, but even small withdrawals can compound over time. Consider this: withdrawing an extra $10,000 each year to help a child might not sound like much, but over 20 years, that could mean $200,000 less in your portfolio—before factoring in lost investment growth. Even small, consistent gifts can add up. A retiree who gives $1,000 a month to help with rent may be spending $12,000 a year, the equivalent of several years’ worth of travel, healthcare, or investment income.

Ultimately, running down savings too quickly increases the risk of outliving your assets, limiting your ability to cover healthcare, housing, or unexpected expenses later in life. Before offering financial help, it’s wise to review how it affects your retirement income projections and withdrawal rate.

How to Be Generous Without Overspending

Supporting your family doesn’t have to mean sacrificing your own security. A few strategies can help create balance:

• Set clear boundaries early. Decide what kind of help you can realistically provide and communicate those limits with family.

• Give from surplus, not core income. If possible, use excess cash flow, bonuses, or investment earnings rather than drawing from principal.

• Use structured giving. Trusts, 529 plans, or gifting strategies can allow you to help loved ones within set parameters without risking long-term depletion.

• Encourage independence. Sometimes the best financial help is non-monetary, like mentoring a child on budgeting, job skills, or financial literacy.

Healthy Boundaries and Practical Alternatives

If your adult child is struggling financially, consider alternatives that don’t involve large transfers of cash:

• Co-signing responsibly. Instead of gifting a lump sum, you might help a child qualify for a loan with clear repayment terms.

• Downsizing strategically. If you have more home than you need, selling and gifting a portion of the proceeds could free up resources without derailing your retirement.

• Life insurance or estate planning. Structuring future support through a policy or trust makes sure that loved ones receive help later without impacting your current income needs.

And, it’s true: it’s not always easy to say no, especially to your children. But clear financial boundaries can strengthen relationships rather than strain them. Start by being transparent about your own financial goals and retirement needs. Let your family know that you want to help, but you also have to make sure your money lasts for your lifetime.

A simple way to frame it might be:

“I want to support you in a way that’s sustainable for both of us. That means I need to make sure my retirement plan stays on track too.”

If conversations about money feel difficult, our team is here to help. We can help walk you through different options and discuss what might make sense for your goals and financial situation.

Run the Numbers: Can You Afford It?

Before making any significant financial commitments, it’s worth asking a key question: Can my retirement income support this gift, both now and in the future?

To illustrate, let’s consider a couple, Bob and Jan Barker, in two different hypothetical financial scenarios.

Scenario 1: Comfortable Retirement Savings

The chart above represents a hypothetical example using an income needs calculation with the assumptions of Social Security benefits of $2,345 and $1,970 per month, a moderate portfolio allocation, a 10% effective tax rate, and a projected life expectancy of age 95. Hypothetical examples are for illustrative purposes only and do not reflect actual investment results or guarantee future outcomes.

Jan retires in 2044, and Bob retires in 2052—the same year their child begins a four-year college program costing $40,000 per year, adjusted for inflation. In this scenario, their retirement portfolio is healthy enough that the extra withdrawals for tuition cause only a modest dip. After the four years of college, the portfolio quickly recovers. With a moderate investment allocation, a 10% effective tax rate, and a planning horizon to age 95, their median projected balance at age 95 remains $1,227,636. This example shows that short-term, targeted support for a child’s education can often be accommodated without threatening long-term financial security.

Scenario 2: Limited Retirement Savings

The chart above represents a hypothetical example using an income needs calculation with the assumptions of Social Security benefits of $1,954 and $1,449 per month, a moderate portfolio allocation, a 10% effective tax rate, and a projected life expectancy of age 95. Hypothetical examples are for illustrative purposes only and do not reflect actual investment results or guarantee future outcomes.

Now, let’s imagine the Barkers have more modest resources. Bob and Jan retire with lower-than-average salaries and Social Security benefits—$60,000 and $40,000 in annual salary, and $1,954 and $1,449 per month in Social Security, respectively. Their standard retirement expenses are $4,166.67 per month ($50,000/year), and they still plan to pay $40,000 per year for their child’s college tuition, starting in 2052. These extra withdrawals exceed their income, causing the portfolio to steadily decline during the four years of college and continue downward afterward. By age 95, their median projected balance will only be around $328,760—a significant drop from the projected $1.2 million in the first scenario. This example highlights how retirees with limited savings can quickly face financial strain when committing to large family support.

While neither scenario suggests that giving is impossible, they clearly illustrate why it’s crucial to understand your own income and savings before making financial commitments. If you’re unsure where to start, try using our free, downloadable How Much Can You Really Spend in Retirement? Worksheet to better understand your income needs and identify what kind of financial support you can comfortably offer without putting your future at risk.

Balancing Generosity and Security

Supporting your loved ones and maintaining your own financial independence don’t have to be opposing goals; it’s about finding a sustainable middle ground. Your financial legacy isn’t just about the money you pass on. It's about the example you set: showing your family how to make thoughtful decisions, live within their means, and plan for the future.

Every family’s financial situation is different, and our team can help you think through options that support both your family and your long-term plans. For additional guidance, our retirement experts are also available to discuss key aspects of your retirement plan with you. We can also walk you through a hypothetical Income Needs Analysis to show how your savings and expenses might look in retirement and help you understand the potential impact of supporting your family.

The concepts expressed herein represent the views and opinions of Pension Consultants, Inc., and are not intended as legal, tax, or investment advice for any specific individual, account, or plan.

Source(s):

[1] Minkin, Rachel, et al. “2. Financial Help and Independence in Young Adulthood.” Pew Research Center, 25 Jan. 2024, https://www.pewresearch.org/social-trends/2024/01/25/financial-help-and-independence-in-young-adulthood/ 

[2] Morgan, Rayne. “Is Longevity America’s New Retirement Crisis?” Insurance News Net, 29 May 2025, https://insurancenewsnet.com/innarticle/is-longevity-americas-new-retirement-crisis