Observations on life

Parents spending retirement savings on kids’ holiday gifts 

Ah the struggling middle-class! Current income, credit cards or taking from savings, spending is spending and if you believe the macro data and its interpretation by politicians, none of it should be happening because the middle-class has stagnant income or actually less income.

IMG_2864So, how do you explain the disconnect? Human nature. Economic data do not account for the behaviors of individuals; positive or negative. It’s not inequality that gets the less equal in the most trouble, it’s life choices.

Most of us are far from being a Mr Spock. We rationalize our choices until we wake up one day and it’s too late. We are 65 and “suddenly” discover living only on Social Security was not that good of a choice … back in 2015 if we hadn’t bought the four kids new iPads we could have $52,000 in the bank without saving another penny. Oh my 📱

Not only do parents admit to overspending on their kids’ holiday gifts, they’re tapping their retirement funds to do so.

That’s according to T. Rowe Price’s 2015 Parents, Kids & Money survey, which not only found that 62 percent of parents agreed with the statement, “I spent more for my kids over the holidays than I should have,” but that 7 percent of respondents actually admitted to using their retirement accounts as holiday spending cash.

Even more tapped their emergency funds to do so, at 9 percent, although fortunately the greater majority used more conventional means. Although maybe it’s not so fortunate after all, since 47 percent used credit cards, racking up those balances.

Fifty-six percent said they used their current income to overspend on the kiddies’ sugar plum visions. Not that overspending makes them happy: 50 percent of parents who overspent on the holidays argue about money with their spouses, while just 27 percent of the parents who didn’t overspend for the holidays argued with their spouses about money.

Source: Parents spending retirement savings on kids’ holiday gifts | BenefitsPro

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1 reply »

  1. What recovery? Since 2008, I have added $105 per month to credit card debt, not much you say, over $10,000. Easy to do, when you can service the debt with 15-20 percent of your monthly income. Many times it was just to buy food or a new gas range when our 15 year old one died. Now that I am tired of paying over $200 per month in interest, I will be using 40% of my income to pay off the debt in 18 months. I will make it on the 60% that is left, no problem, cut cable TV save $60 per month, no cell phone save $45 per month. thermostat at 65, saved $40 per month in winter, no A/C in summer, just fans, save $60 per month. Only eat at home save $100 per month. Don’t drive car, save $75 per month, because it needs brakes repaired save $1000, for now. $40 per month savings on car insurance. Choices will always come back and bit you, it would of been much easier to cut the $105 per month, I know I could of cut at least half of the spending and only have $5,000 in debt.

    The problem with today’s economy, with the high prices, many are using credit to maintain that middle class standard of living.
    It is time we all cut back, if we do not have the cash to pay for it, leave the plastic and the retirement accounts alone. Unless it is a real emergency, that is about 10 % of the time. Something many have not had to do over the last 25 years. The new normal SPEND LESS! SAVE MORE! Or the choices you make will change your life, guaranteed.

    Like

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