It may be OK to give your 12-year-old kid $10 to play video games at the arcade but is it a good idea to give $10,000 to a grown child who is just not making it?

Baby boomer parents appear to be especially guilty of forming co-dependent financial relationships with their adult children. The bad news is that these gestures of goodwill may affect their own ability to retire.

A recent study from Bank America/Merrill Lynch Wealth Management shows that in the last five years, three out of five (62 percent) of Americans age 50 and older have provided financial help to family children, parents, grandchildren, other relatives. Generosity runs deep in our culture. The survey queried 5,500 baby boomers age 47 to 67 in mid-2013.

by: CONTRIBUTED PHOTO - Julia Anderson is the founder and ongoing contributor to her Web site where she writes about women, money, retirement planning and the challenges of life after 60.Average assistance

The average financial assistance during the prior five years was a hefty $15,000.

The money may have helped a relative with a one-time need or it could have been ongoing assistance over the course of many years.

The bad news? The vast majority (88 percent) of people 50 and older who have handed out this money have not factored in how the gift may affect their own ability to retire. And there was a “dangerous” absence of discussion about the gift among family members, said the survey analysts.

Retirement fact: Every dollar that goes into a retirement savings fund such as an Individual Retirement Account or a 401(k) earns reinvested money either tax-deferred or tax-free. It’s the only real way to save enough. Give the money to your kids and it’s gone. You may come up short at age 66.

“Given the challenging economic climate during the past several years, it’s not surprising that so many Americans have extended financial support to their loved ones,” said Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch. “However, such admirable willingness to assist family members should not place one’s own long-term financial security in jeopardy, and can be a hidden risk to retirement that must be considered and planned for.”

Neither should it jeopardize your own immediate financial security. For example, buying a house with your children or giving them your old house can both mean trouble. You likely won’t get your money back and if they can’t make payments, you’re stuck with the debt.

Best ways to give

Before parting with your hard-earned money, have an open discussion with all family members. It may feel right to help the kids but that giving may come back and bite everyone. It won’t just be your problem, it also could be theirs.

So how can we best help our low-earning adult children? Here are a few tips from investment advisers:

n Imagine you’re running a family 401(k) and set up a plan to match the savings that your kids do. That way they have skin in the game.

n Pay for a training course or help with grad school or pay for childcare so they can build a career. That way they have goals for getting ahead.

n If you own appreciated stocks or a mutual fund outside of a retirement plan....give your low-earning kids shares as a gift. The child can sell the shares without the capital gains tax consequences that you might face. Of course with any tax strategy such as this, check with your tax adviser or CPA before making this move.

n Make contributions to their Roth IRA accounts.

n Bypass the kids altogether and put money into

a 529 account to help pay for the education of a grandchild.

And, if you can’t afford to hand out money, offer non-financial aid: Baby sit, help with home repairs, or cooking so they can work.

Or you can do the math on your own retirement needs and just say NO.

Julia Anderson is the founder and ongoing contributor to her Web site where she writes about women, money, retirement planning and the challenges of life after 60.

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