How Parents Can Support Their Children Without Depleting Retirement Funds


FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.


Here Are Two Creative Solutions For Parents Who Still Need To Support Their Adult Children (Wall Street Journal)

For parents who still need to support children in their 30s, 40s, or 50s, often it will come down to either investing in retirement savings or giving to their adult offspring. In the Wall Street Journal, Kelly Graves from Carroll Financial Associates suggested an alternative to depleting retirement funds, while still providing support for children.

"Another approach is for the parents to guarantee a bank loan instead of loaning the money directly. This can be useful for the parents because it doesn't deplete their assets. But it requires more documentation, and the banks typically won't offer a personal loan like this for a term longer than 10 years. In my experience, a middle-tier, local bank is more willing to make these kinds of out-of-the-box loans than a big national chain," Graves writes.

Alternately, parents can "make a loan that serves as an advance on the child's inheritance," according to Graves. "Even though it's a loan, the chances are your client is never going to see that money again in their lifetime, so you have to take it out of the equation for retirement planning purposes."


Bill Gross Just Saw His 15th Straight Month Of Outflows (Business Insider)

Pacific Investment Management Company's Total Return Fund, run by Bill Gross, has lost $830 million in its 15th straight month of outflows. At the end of July, assets totaled $223 billion.

"Marketwatch reports the fund returned negative 0.5%, underperforming the benchmark Barclays Aggregate bond fund, which returned negative 0.3%. The fund has underperformed 72% of its peers through July," BI's Rob Wile wrote. "However, it's topped 87% of its peers in the past three months. And as Bloomberg recently reported, nine of PIMCO's 15 largest mutual funds are beating at least 75% of peers YTD."

More Millennials Are Starting To Save Early, Investing In Stocks And Retirement Plans (Bloomberg)

According to a retirement study, millennials have started their savings at age 22, compared to previous generations at 27, or 35. Though this generation is considered to avoid risks and stocks, their actions are saying otherwise, Bloomberg's Victoria Stilwell reported.


"The increased use of defined contribution retirement plans -- especially those with automatic enrollment features or options that reduce risk as an employee ages -- is keeping millennials invested in equities in a way that flies under their risk radars, said Jean Young, the Valley Forge, Pennsylvania-based lead author of Vanguard Group's How America Saves report," Stilwell wrote.

Stilwell also reported that millennials are cutting back on buying houses and credit card spending.

A Better Way To Think About Retirement Is To Focus On Expenses, Not Withdrawal (Financial Planning)

In an interview with Financial Planning, Michael Falk of Focus Consulting Group said there's a better way to think about retirement than just withdrawal rate plans. He said most people focus on building a bigger and bigger accumulation of wealth, with a certain percent withdrawal. But in order to do that, people need to make a trade off with present day life, which many aren't willing to do.

"You want to start from the bottom and work up. We don't talk about a 4% rule, a 3% rule, a 5% rule. What we talk about is covering your fixed expenses. Those could be debts, those could be your electric bill. And then, after you cover your fixed expenses, we talk about your discretionary spending," Falk said. "And then, how you invest the rest of your money, assuming you have some assets still remaining, most people still do at that point, then you can take risk with them, and if the market goes against you, it doesn't do anything to your lifestyle."


Financial Advisors Are Less Confident And Optimistic About The Economy (

According to a Advisor Confidence Index, financial advisors' confidence in the economy decreased 3% in July, mainly when talking about the next six months. However, many have different ideas on what exactly will happen in the market.

"Many of the advisors polled said they were nervous growth in the stock market was outpacing the economy," Wealth Management reported. "Several mentioned the phasing out of the Federal Reserve's bond buying program, slated to end completely in October, as having a significant effect on the markets, though there was little consensus on how so."