Investing

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Warren Buffett said Americans should not be concerned about their bank deposits in the wake of the latest financial shock in the sector and the government would ensure no depositor in this country lost a dime.
“People shouldn’t be worried about losing the money and the deposits they have in an American bank, and today, they have no reason to worry,” said the Berkshire Hathaway chairman and CEO in an interview with Becky Quick from Tokyo on CNBC’s “Squawk Box” Wednesday. “But the message has gotten very confused and people don’t really understand how it all works.”

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The banking sector went through a brief panic in March as depositors fled Silicon Valley Bank, which had mismanaged its bond portfolio and was overly leveraged to the tech industry. Fear grew that depositors with more than the $250,000 FDIC insurance limit would lose their money. But over the weekend on March 12, the government backstopped all depositors in SVB, along with those in Signature Bank, no matter the amount they had with the banks.
Buffett said the government would likely step in to backstop all depositors in all U.S. banks if that was ever necessary, though he did note that would require Congressional approval.
“We’ll get the OK,” he said when asked if Congress would approve that extraordinary action. Buffett noted that Congress would also adjust the debt ceiling for this to take place in order to avoid financial ruin for the country.
The banks closures have set off a crisis of confidence among investors and customers as they questioned whether other financial institutions could face the same fate. Bank stocks largely tumbled in March as investors grew skittish on the sector, with the selloff specifically focused on regional banks amid liquidity concerns. To restore confidence, 11 banks put $30 billion in deposits in First Republic Bank, whose shares have tumbled during the shock.
Buffett noted that shareholders may lose out if more bank failures occur and rightly so, but depositors shouldn’t be worried.

Buffett’s father

Bank closures are an issue that’s impacted Buffett personally, he said, with his dad losing his job and savings in the 1930s when the bank he worked at failed.
But things have changed in a positive way since the Great Depression in terms of regulations and knowledge of bank runs and what such things can do to a financial system. The Federal Deposit Insurance Corporation was created during the Great Depression.
Buffett, 92, said he so confident that U.S. depositors are safe that he would put a million dollars of his own money in a bank and challenged someone else to do the same. He said he will give that money to charity at the end of the year if just one American lost their deposits through a bank closure, but he keeps the other person’s money if U.S. depositors remain whole.
“If any American depositor has lost money from a bank failure, the other soul gets to name where the $2 million goes, to what charity,” he said. “If they haven’t, I get the payment. And that’s a firm offer, and we’ll see who steps up.” More

Smart Tax Planning

If you can’t pay your taxes by April 18, you may have more options than you expect, according to tax experts.
You can contact the IRS to arrange an installment agreement, an offer in compromise or currently not collectible status.
But ignoring the filing deadline is the “biggest mistake” taxpayers can make, according to Lawrence Pon at Pon & Associates in Redwood City, California.

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The federal tax deadline is one week away for most Americans, and if you can’t cover your balance by April 18, you may have options, tax experts say.
Whether you file on time or request an extension, you need to pay taxes owed by the original due date to avoid racking up penalties and interest.  

Skipping the filing deadline is the “biggest mistake” taxpayers can make, according to Lawrence Pon, a certified financial planner and certified public accountant at Pon & Associates in Redwood City, California.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Here’s why: The penalty for failure to file is 5% of your unpaid balance per month, capped at 25%, plus interest. By comparison, the late payment penalty is 0.5%, also levied monthly and limited to 25%, with interest.
However, some areas, such as most of California and parts of New York, have more time to file and pay this season due to natural disasters, Pon said. There’s a full list here.

Don’t ignore IRS notices

Another common mistake is ignoring IRS correspondence once you’ve fallen behind on your taxes, experts say.
Sheneya Wilson, a CPA and founder of Fola Financial in New York, said avoiding negligence is her “biggest piece of advice.”

If you receive an IRS letter for an unpaid balance, you need to respond to that notice quickly, she said. Otherwise, solutions with the agency may become more challenging.
Whether you’re wrestling with a first-time balance or older tax debt, here are some options to consider.

1. Installment agreements

Wilson said the most popular option is to apply for an installment agreement, which is a long-term monthly payment plan through the IRS that “takes about five minutes” to set up.
If you owe $50,000 or less, including tax, penalties and interest, you can set up an installment plan online, but you’ll have to call the IRS for larger amounts, she said.
However, the agency won’t approve the plan if you have unfiled returns from previous tax years. And if you miss a payment, the IRS can cancel the installment agreement and your remaining balance will be due, Pon warned.

2. Offer in compromise

Another option, offer in compromise, may allow you to settle for less than you owe. But the IRS urges taxpayers to explore “all other payment options” first.
If you can prove you’ve gone through financial hardship, it’s possible to reduce your balance through an offer in compromise, Wilson said.

3. Currently not collectible

There’s also a “currently not collectible” status, in which the IRS temporarily stops trying to retrieve unpaid balances.
If the status is approved, your debt may still accrue penalties and interest, and the IRS can use your future tax refunds to cover the balance, according to the Taxpayer Advocate. More

Social Security beneficiaries now confront long waits for service on the phone and in person at the agency’s field offices.
Behind the scenes, the agency’s workers face low staffing levels and overwhelming work loads, a union representing more than 40,000 employees said.
Increased funding for the program, as well as stronger policies to help retain workers, may help, the union said.

The Social Security Administration office in Brownsville, Texas.
Robert Daemmrich Photography Inc | Corbis Historical | Getty Images

Long wait times for beneficiaries seeking help from the Social Security Administration have become more common since the onset of the Covid-19 pandemic, even prompting a congressional hearing in 2022 to address the issue.
Beneficiaries who call the agency’s toll-free number may face hold times of more than 30 minutes, experts said Monday during a panel hosted by the American Federation of Government Employees, or AFGE, a union representing more than 40,000 Social Security Administration employees.

Long lines and shortened hours are common at many of the agency’s field offices, where beneficiaries may seek in-person assistance, the union said. Last year, the agency, in response to lawmakers, outlined steps it planned to take to address those waits.
Applicants for disability benefits face waits of more than six months for decisions from the agency, the union said.
The service delays experienced by the program’s approximately 67 million beneficiaries are signs of “an agency in crisis,” according to Rich Couture, AFGE Council 215 president.
The Social Security Administration did not immediately respond to a request for comment.
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The agency “is in the midst of the worst public service crisis in memory caused by historic levels of employee attrition due to uncompetitive pay and benefits, exceedingly low employee morale, and overwhelming workloads,” Couture said at Monday’s panel.
AFGE leaders said the agency’s diminishing services have come amid funding constraints that have lasted for more than a decade.

White House funding proposal may not be enough

President Joe Biden has proposed a 10% increase in funding for Social Security with his fiscal 2024 budget to help improve customer service.
But while Biden is calling for $15.5 billion in funding for the agency, AFGE said it needs $2 billion more, or almost $17.5 billion.
Staffing is at the lowest level it has been since 2010, according to AFGE Council 220 President Jessica LaPointe.
Since 2010, the federal agency’s budget has fallen 14%, adjusted for inflation, Rep. John Larson, D-Conn., noted in 2022.
“As a result, the remaining employees are burned out,” LaPointe said. “The public is not getting timely services they desperately need.”

AFGE’s surveys show 76% of Social Security staffers say they have overwhelmingly large workloads that prevent them from performing their jobs to the best of their abilities. Meanwhile, 9 out of 10 workers know someone who has left their job due to overwhelming work-related stress.
Poor employee retention is causing public service to deteriorate, LaPointe said.
“Simply put, other employers offer better pay, benefits, telework and remote work options, upward mobility and support,” LaPointe said.
AFGE’s $17.39 billion budget proposal for 2024 would include 56%, or $9.62 billion, for employee salary and benefits; 17%, or $2.92 billion, for state Disability Determination Services; 16%, or $2.75 billion, for rent, equipment, furnishings, security guards and other items; and 11%, or $1.89 billion, for technology.

Beneficiaries deserve a Social Security system that works and that means a fully funded Social Security Administration.

Linda Benesch
communications director at Social Security Works

It would also include $100 million for employee retention pay, $90 million for mailed Social Security statements and $20 million for magnetometers, or metal detectors.
Biden’s budget request of 10% more for the Social Security Administration is the “absolute bare minimum that Congress needs to approve for SSA,” Linda Benesch, communications director at advocacy organization Social Security Works, said Monday.
“Beneficiaries deserve a Social Security system that works and that means a fully funded Social Security Administration,” Benesch said.

The agency would also benefit if Congress authorized the use of some of the money from the agency’s surplus, which totals about $2.8 trillion, Benesch said.
In a report released in September, the Social Security Advisory board, an independent federal government agency, encouraged the Social Security Administration to evaluate the quality and accessibility of its services.
AFGE is slated to soon begin negotiations to pursue changes, including more competitive pay, to help tackle the service delivery crisis, Couture said.
“Each experienced employee lost to attrition means more claims that go unprocessed, calls that go unanswered, and people who aren’t being served by the system they paid into when they need it,” Couture said. More

More than one-third of Americans are saving their tax refund this season, according to a CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive.
And 44% of respondents have earmarked the funds to pay off debt or bills, the findings show.
As of March 31, the IRS issued nearly 63 million refunds, with an average payment of $2,910, compared to $3,226 at the same point in the filing season last year.

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Most Americans will use their tax refund to bolster their finances amid economic uncertainty, stock market volatility and lingering inflation.  
More than one-third of Americans are saving their tax refund this season and 44% have earmarked the funds to pay off debt or bills, according to the CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive. 

Those percentages were even higher for younger respondents — closer to one-half for Americans ages 18 to 34 years old — based on the March poll of more than 4,300 consumers.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

A recent Bankrate survey also found that tax refunds are important to most Americans’ financial situation, and that paying off debt and boosting savings are top priorities this year, which is similar to past findings.
“People tend to use this money very practically,” said Ted Rossman, a senior industry analyst at Bankrate. “This is something that we see year after year.”
As of March 31, the IRS had issued nearly 63 million refunds, with an average payment of $2,910, compared to $3,226 at the same point in the filing season last year, the agency reported Friday.

Refunds are down 10% at a time when other costs are up significantly.

Ted Rossman
Senior industry analyst at Bankrate

“Refunds are down 10% at a time when other costs are up significantly,” Rossman said. Although inflation has been trending downward, the annual rate was still at 6% in February, including volatile food and energy costs.

“This may be the largest windfall that a typical household receives all year,” Rossman said. “So it’s unfortunate that the amount is getting smaller at a time when other things are costing more.”
Some 45% of Americans expect to receive or have already received a tax refund this season, according to the CNBC survey.

How to pick between savings and debt payoff

Paying off high-interest debt, like a credit card balance, is “always a prudent option” for your tax refund, said Ken Tumin, founder and editor of DepositAccounts.com, a website that tracks the most competitive options for savings.  
“The average credit card rate is a little bit over 20% these days, which is the highest since we started measuring almost 40 years ago,” Rossman said. “So if you have credit card debt, putting some of this refund money towards that debt is a really good choice.”

Of course, emergency savings is also important, particularly in a shaky economy, Tumin said, noting that it’s a good time to consider a high-yield online savings account, as rates are at their “highest levels in more than a decade.”
Alternatively, you may opt to split your refund between debt payoff and padding your emergency fund, depending on your situation, Rossman added. More

Women & Wealth: A CNBC Your Money Event April 11 – Register at CNBCevents.com

CNBC’s Financial Confidence Survey, conducted in partnership with Momentive, found most Americans are living paycheck to paycheck.
Fewer than half of U.S. adults said they have an emergency fund.
More women than men admit feeling financially stressed.

Inflation, economic instability and a lack of savings have an increasing number of Americans feeling financially stressed. 
Some 70% of Americans admit to being stressed about their personal finances these days and a majority — 52% — of U.S. adults said their financial stress has increased since before the Covid-19 pandemic began in March 2020, according to a new CNBC Your Money Financial Confidence Survey conducted in partnership with Momentive.

Anxious and uncertain about whether they can get a better handle on their money, some may be intimidated by the prospect of creating a budget or unsure of where to stash their cash to get the highest returns. Others may be wondering how to begin saving for retirement when they’ve gotten off to a late start. 

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

“People are worried that the money they’ve saved won’t last and are worried they’re going to have to lean more on their credit cards and other sources of debt just to get by,” said Bruce McClary, a senior vice president at the National Foundation for Credit Counseling. 

Higher expenses

The cost of the basic household expenses — rent, groceries and utilities — are all higher than a year ago, weakening consumers’ purchasing power. 
Nearly 60% of respondents cited inflation as the main contributor to their financial stress, followed by economy-wide instability (43%), rising interest rates (36%) and a lack of savings (35%), according to the survey of 4,336 adults, which was conducted at the end of March.

Bank failures weaken confidence

A former Woodmere, New York, branch of failed Signature Bank.
Newsday Llc | Newsday | Getty Images

The recent failures of Silicon Valley Bank and Signature Bank and worries about the health of the U.S. financial system add to the uncertainty. Only 13% of adults said they are very confident in America’s banking system. About a third said the recent banking crisis made them much more concerned about their own financial security, and 42% said it made them somewhat more concerned. 

Increasing cost of debt

The survey found most Americans (58%) are living paycheck to paycheck. Struggling to make ends meet, many are relying on credit cards to cover any shortfalls. Meanwhile, nearly one-quarter of those surveyed said credit card debt also contributed to their financial stress. 
Government data shows credit card balances are rising and delinquency rates are increasing. Household debt levels surged by $38 billion in February from a year ago, according to a report by the U.S. Federal Reserve. 

Financial security eroding 

A combination of higher prices for basic goods and services, increasing borrowing rates on credit cards, auto loans, mortgages and other debt, and little or no financial cushion is eating away at people’s sense of financial security. 
Only 45% of U.S. adults said they have an emergency fund. And, for those who do have emergency savings, about 26% polled said they have less than $5,000 saved.

High earners aren’t immune

Even those making $100,000 or more are feeling the squeeze, with the majority (57%) saying they feel financially stressed. About a third of people earning six figures said they are living paycheck to paycheck and more than a quarter said they have no emergency fund. 
“There’s almost no segment of the population that is untouched by the financial pressures that we’re experiencing more broadly at this time,” McClary said. 

What to do with a windfall

Fizkes | Istock | Getty Images

About a quarter of respondents said if they had $10,000, they would invest it in a combination of stocks, bonds and savings. Putting the money in a high-yield savings account was another popular option. Only 7% would invest in the stock market and the same percentage would spend the money. 
Meanwhile, just 4% of women compared to 11% of men would invest a $10,000 windfall in the stock market. Women are more likely to put that windfall in a high-yield savings account or a combination of stocks, bonds and savings, the survey found. 

Women more financially stressed than men

As a group, women are feeling more stressed about the personal finances than men, according to the survey, with 72% of them saying they are financially stressed, compared to 67% of men. Women are also more likely to report they are living paycheck to paycheck and have no emergency savings. 
Some women are also part of the so-called sandwich generation.
“They are juggling physically and financially with the commitments to their children and aging parents,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California. 

Women tend to be savers and look for deals, but are more risk averse when it comes to investing.

Lindsay Bryan-Podvin
financial therapist

“We’re talking dealing with issues like long-term care facilities for a parent, while helping their child prepare for their college applications and figuring out how they will be able to pay for college,” said Sun, a member of the CNBC Financial Advisor Council. “It’s a lot of stress.” 
Lower pay and higher costs of child care may also add to financial stress for women. Another reason for the gender difference, experts say, may be the difference in financial education among girls and boys.
“Girls are taught about bargain hunting, the thrill of looking for sales, while boys are taught to take more risks and pursue entrepreneurial activities,” said Lindsay Bryan-Podvin, a Michigan-based financial therapist. “So when they grow up, women tend to be savers and look for deals, but are more risk averse when it comes to investing.”
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Women & Wealth: A CNBC Your Money Event April 11 – Register at CNBCevents.com

Between higher costs and a possible recession looming, families are increasingly feeling under pressure.  
More than half of all Americans are now living paycheck to paycheck, according to a new CNBC report.
Learning to better manage financial stress boils down to some basic budgeting skills and key behaviors, experts say.

Between higher costs and a possible recession on the horizon, families feel increasingly strained financially.  
More than half, or 58%, of all Americans are now living paycheck to paycheck, according to the CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive. 

And even more — roughly 70% — said they feel stressed about their finances, mostly due to inflation, economic uncertainty and rising interest rates, the survey found.
“Whether or not you have significant wealth, everyone is feeling squeezed,” said Misi Simms, portfolio manager at TIAA, a Fortune 100 financial services company.

How to manage financial stress

Adults who are struggling to afford their day-to-day lifestyle feel even more under pressure, according to the CNBC survey conducted in March. They are three times more likely to say a lack of savings or credit card debt is a problem and twice as likely to fear being laid off. They also are more likely to worry about health-care costs and student loan debt.
With stress mounting, the overall financial health of U.S. employees has plummeted overall to only 55% — down from 64% a year ago, according to MetLife’s annual Employee Benefits Trends study.
“People are in survival mode,” said Lindsay Bryan-Podvin, a certified financial therapist and partner of Upwise, MetLife’s Financial Wellness App.

People are in survival mode.

Lindsay Bryan-Podvin
certified financial therapist

Bryan-Podvin advises clients to start by checking in with their “money mood.”
Connecting how you feel to your financial actions, such as making a big purchase or working toward a future goal, helps break free from negative spending and savings patterns, Bryan-Podvin said.
“One of the easiest ways to put this concept into immediate action is by starting to celebrate any small financial ‘wins’ you achieve on a daily, weekly or even monthly basis,” she said.
For example, jot down a few minor goals or milestones you can work toward in the near term, like reducing your subscription count to 10 from 15 or committing to no more than two takeout orders a week, she said.
Once you’ve accomplished one of your goals, treat yourself to something that sparks joy or makes you feel good.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

Of course, financial literacy is also key to an improved outlook and less stress, according to TIAA’s Simms.
Many studies show a strong connection between financial literacy and financial well-being.
Those with greater financial literacy find it easier to make ends meet in a typical month, are more likely to have higher credit scores and tap lower-cost loans, and less likely to be constrained by debt or be considered financially fragile.
They are also more likely to save and plan for retirement, according to data from the TIAA Institute-GFLEC Personal Finance Index based on research over several years.

While there is an important role for schools to play, a financial education should start at home and continue in the workplace.
“Ask your employer if you can speak to a financial representative,” Simms said. “And then, whatever you learn, take that to your children.”
“We talk to our kids about so many things,” he added. “We should also be talking to them about financial literacy.”

How to get your finances in check

When it comes to better managing your finances, one of the most effective tools is to start with a budget, said Sabino Vargas, senior financial advisor at Vanguard — even if that means going back to a basic envelope-stuffing method to stay disciplined in your spending.
Vargas recommends further strengthening your financial standing by paying down debt, particularly high-interest credit card balances, to improve your monthly cash flow so you can set even more money aside in savings. 
“Understand where money is coming from and where it is going,” Simms also said.
“You may not have three to six months in an emergency fund, but try to commit something to savings,” he advised. “Everyone has to start somewhere.”

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To that end, Vanguard’s Vargas suggests paying yourself first. “If you’re struggling to keep track of expenses, try paying yourself first the day your paycheck hits,” he said.
This includes putting money toward emergency savings or a retirement fund and any necessary expenses like rent, car payments and insurance. That will help build up your savings while also prioritizing your largest and most important expenses. (If your employer has a 401(k) plan and offers a match, always contribute enough to get that match, he also advised.)
But just because you’re looking to save more, doesn’t mean you have to give up all indulgences, he added.
To avoid overspending on discretionary items or activities, such as going out to eat, it may help to set a monthly budget for how much you can spend, as well as how often, “so you are not sacrificing the things you really enjoy,” he said. More

Because of the way credit scores are calculated, forgiven student debt may lead to a temporary drop in some borrowers’ scores.
Here’s what you need to know.

Liubomyr Vorona | Istock | Getty Images

The Biden administration’s sweeping plan to cancel up to $20,000 in student debt for tens of millions of Americans may have an unintended, though hopefully temporary, consequence for some people, experts say.
“For many borrowers, it will cause their credit scores to drop,” said higher education expert Mark Kantrowitz.

Here’s why: Throughout the three-year pause on federal student loan payments, borrowers’ accounts have been reported to the credit bureaus as current, Kantrowitz said. (Payments are currently scheduled to restart by September.)
More from Personal Finance:Here are the 2 Supreme Court student loan forgiveness casesFederal student loan payments could restart in roughly 2 months, or 6Being behind on federal student loans can lead to more money problems
On-time payments help boost people’s scores.
“Payment history is the most important factor in the credit scoring formula,” said Ted Rossman, senior analyst at Bankrate.com.
If the Supreme Court rules that the relief plan is legal and can go into effect, however, millions of borrowers will have their student debt balances wiped out entirely and lose out on that positive reporting, Kantrowitz said.

Of course, a temporary dip in a credit score will not likely matter much to someone getting thousands of dollars in debt forgiveness. Also, those who still have a balance after the cancellation won’t see a drop if they pay their bills on time.

And although the relief may lower scores a bit, having less debt ultimately helps your rating, Rossman said. That’s because owing less improves your so-called debt-to-income ratio, he said.
Lenders look at this ratio when deciding how much to let you borrow. Some use something called the 28/36 rule, which specifies that no more than 28% of your monthly gross income goes toward housing costs, and no more than 36% goes toward total debts. (A few mortgage lenders have even higher caps.)
“So overall, I see student loan forgiveness as a significant benefit to someone’s overall financial situation, even if their credit score may decline a little bit in the short term,” Rossman said.

Focus on paying down other debt

Despite the possible ding to borrowers’ credit scores, another benefit to those who get their student loans forgiven will be the chance to pay down other debt faster, Rossman said.
With the average credit card interest rate at record highs, he said, “it’s important to make credit card debt payoff a priority.”
“Any extra money you can funnel toward this debt can also improve your credit score as a result,” Rossman added.

If the Biden administration is able to proceed with student loan forgiveness, Rossman said he expects the relief to show up on credit reports within a month or two. He recommends you check your report regularly for free at AnnualCreditReport.com to make sure all three credit rating companies — Experian, Equifax and TransUnion — are showing the correct information, including a possibly lower student debt balance.
If the Biden plan doesn’t survive the Supreme Court, the resumption of student loan bills should not affect borrowers’ credit scores as long as they remain current, Kantrowitz said. More

While young adults said 21 is a good age to start paying some of their own expenses, older generations are more likely to think that their kids should be completely financially independent by then.
Meanwhile, 68% of parents are sacrificing their own financial well-being to help support their grown children, according to a new Bankrate report.

Most people feel like a grownup by the time they’re 18, but these days young adults might not become financially independent until years later.
And even then, parents and their children could disagree on what exactly that means.

While young adults said 21 is a good age to start paying some of their own expenses, older generations are more likely to think that their kids should be completely financially independent by then, according to a new report by Bankrate.com.
More from Personal Finance:Most adults make this simple money mistake62% of Americans are living paycheck to paycheckPrioritizing retirement and emergency savings in a shaky economy
In part, millennials and Gen Z face financial challenges that their parents did not as young adults. On top of carrying much more student loan debt, their wages are lower than their parents’ earnings when they were in their 20s and 30s.
Of course, inflation has made it even harder for those trying to achieve financial independence. Soaring food and housing costs pose additional hurdles for young adults just starting out.
Now, 68% of parents with children over age 18 are making a financial sacrifice to help support them, according to Bankrate’s report.

From buying groceries to paying for cell phone plans or covering health and auto insurance, parents are spending more than $1,400 a month, on average, helping their adult children make ends meet, a separate report by Savings.com found.

When ‘offering financial assistance can backfire’

Jason Stitt | Getty Images

For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is in jeopardy. 
“Remember that saying about putting your oxygen mask on before helping others?” said Ted Rossman, Bankrate’s senior industry analyst. “Offering financial assistance can backfire if it puts your own savings, investments and financial well-being at risk.”
About half of parents with adult children said that support has come at the expense of their own emergency savings or ability to pay down debt, while slightly fewer said supporting their children has been detrimental to their retirement savings, Bankrate found.

‘Where to draw the line’

“It’s hard to know exactly where to draw that line,” Rossman said. Make sure the assistance works within your budget and be clear about the parameters — at the very least, discuss it, he advised. “It might help to attach a specific dollar amount or timeframe.”
“Everybody is everyone else’s lifeboat when it comes to hitting an iceberg,” said Laurence Kotlikoff, economics professor at Boston University and president of MaxiFi, which offers financial planning software.

However, “it has to go both ways,” Kotlikoff said. “Parents are providing a lot of support, and the kids have to realize that the quid pro quo here is that they’re going to be expected to take care of their parents.”
Having an open dialogue can help, he added. “Once that conversation gets going, it can continue for the next 40 years.”
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