Someone please help me explain to my dad that he shouldn't take out money to give me. It's for my wedding. he's 62 and unemployed and wants to give me the same amount of money that he gave my sibling for their wedding.
I've told him no many times but as you can probably guess but how my father is with finances, I am not well versed and not sure how to explain to him why it's bad.
I just can't let him give me money from his retirement account.
My dad wants to give me money out of his retirement fund
byu/Wrong_Fox2756 inpersonalfinance
Posted by Wrong_Fox2756
13 Comments
“thanks but we’ve got it all covered, and I so appreciate the sentiment behind it but we really don’t need the money.”
Don’t say “I think you need it more.” Easy breezy – “thanks so much dad, that means a lot, but we’ve got tte wedding more than covered, you set me up well for life. I’m glad you were able to help my sibling but it’s really not necessary in this case.”
Repeat.
If he gives you a check, don’t cash it. If there’s not way to avoid it, park it somewhere since it sounds like he might need it sometime.
Sometimes I find it useful to act confused or befuddled. “I thought we talked about this – I have the wedding covered so what would I do with this money? It makes no sense.” “Hang on to it for me, I’ll let you know if I need it.”
Working in financial services I can tell you these decisions aren’t made on logic so don’t try to win it with a logical argument. It’s an exercise in futility, which you have already experienced.
Likely your dad feels emotionally tied to this choice so that is where you need to spend your energy. You’ll likely be more successful by assuring him your love and relationship with him is not and will not in any way be impacted by money he does or does not give you.
Take the money, use it to contribute to your own retirement accounts, bank the contributions you would have made to help him if he needs it.
And say thank you.
Depending on your relationship with him:
– “I’d rather pay for my own wedding now than pay for your lifestyle in 10 years”
– “Turns out (your spouse name) actually saved this up already, we’re good – why dont you take us to a nice dinner on our first anniversary instead?!?!”
– “Look dad, you and I both know (sibling name) is kind of a screw-up and needs help – but I dont”
“Dad. I love you. I appreciate you. But it would make me feel terrible if you took money from your retirement. Please don’t.”
I guess it all depends on how much he has. He’s over 59.5, so no penalty for withdraws.
You can also make it clear to him you’d rather he keep it for himself. Ultimately, it’s his money, and he’s going to do what he’s going to do.
I can tell you that no parent wants to feel like they don’t have enough to help out their kid though. What I would do if I were you – make it clear you don’t need it and would prefer he keeps it for himself. If he persists, graciously accept, but quietly set it aside so you can give it back to him if he ever needs it.
Focusing first on just the finance part:
Well, it could be worse. At least he’s old enough that he’s not imposing an extra penalty on himself for that potential withdrawal. He’ll owe tax on it (assuming some sort of Traditional account), but that’d be the case even if he withdrew money to keep for his own use.
Him drawing from his retirement isn’t inherently “bad” depending on his situation. At 62 he’s not necessarily unemployed, he could just simply be retired. If he stopped working by choice because he had built up a $5 million nest egg and wants to give you $10k, that is not going to ruin his life. If his career ended unexpectedly and he’s barely scraping by on an early claim of Social Security + small retirement draws and wants to give you half of his retirement savings, that’s a different story. My guess is he’s likely somewhere in the middle of those two; where he’s at would be useful to know.
Do you really have a clear and accurate idea on what his retirement situation is? Does he have any other sort of income (investment account, rental properties, possibly social security) that supplements his need to pull from that retirement savings? How big of a chunk of his balance would this gift be and what would that leave him with?
Obviously, all that stuff above is completely separate from the relationship situation of him wanting to gift you money and you not being willing to accept it. I’m guessing he wants to do this from a place of helping his child and possibly keeping things “fair” to you with what he did for your sibling. Those aren’t bad motivations, as long as he’s not shouldering a large negative consequence on his own finances to make it happen.
He’s 62 and we don’t know how much money he has, but if he takes from retirement it’ll not only be that amount but he’ll be taxed on it as well. I know that we’re all taxed on investment money from retirement, but it may ultimately impact him if he doesn’t have substantial savings. If he does, however, then you both win
Take the money, put it into an investment account and grow the money. When your Dad needs money give it back to him.
What percentage of his account is he giving you?
You could also just ask him to pay a more nominal part of your wedding that would still be a contribution and make him happy to help with.
Retirement accounts are typically taxed when withdrawn at least in the US!
Should I assume that you have reason to think he can’t afford it?
At 62 I hope to be unemployed too. I also hope to have plenty of money and would be loving excuses to help my kids.
Is he unemployed or retired?