How many parents will help their millennials and generations of children with money?
Many parents still support adult children. How much financial support is really available in general?
New research shows that parents do anything for their children, but that can cost them a lot of money on themselves.
Over a third (36%) of the 3,000 parents surveyed by Ameriprise in January worry that supporting adult children might derail their retirement plans, but they continue to lend a hand. According to the survey, six out of 10 (63%) have planned or planned to pay ongoing expenses such as living expenses and telephone bills for adults, while 76% have plans or plans to pay large one-time expenses such as weddings and down payments.
“It certainly deserves praise, but it underscores the need for parents to plan for their financial future,” said Deana Healy, vice president of financial planning and advice at Ameriprise. “First and foremost, it’s intentional. What you need for your own retirement and goal is to help your kids with what I can afford and what I want to buy.”
Parents are not just supporting adult children
96% of grandparents, or about 60 million, are financially helping their grandchildren. They spend an average of $3,917 a year on their grandchildren, totaling $238 billion nationwide.
“Grandparents’ financial support is not a trend, it’s a fundamental part of how American families run,” writes Ryan Malloy, editor of TheseniorList.com.
Three in 10 grandparents said they prioritize their grandchildren’s needs over their own financial stability.
Surprisingly, 11% of grandparents are already immersed in retirement savings or accounts to help their grandchildren, while 51% are considering doing so to help pay everything from tuition to groceries, the survey said.
“The meaning is profound when you consider that almost half of Americans over 55 don’t have retirement savings, according to the Government’s Office of Accountability,” he said. “For savings grandparents, exhausting these funds for the needs of their current family can have devastating financial consequences in later years.”
Should parents and grandparents support adult children?
There’s nothing wrong with helping and supporting adult children, but the problem is when people do it to their own disadvantage, Healy said.
When you reach that point, your parents and grandparents need to remember, “Of course, it’s okay to say no.”
The long-term sustainability of the current pattern is also questionable, Malloy said, as parents and grandparents considering refinancing their homes are also other parents who are in debt to help their adult children.
How can I stop supporting adult children?
The challenge is to maintain family relationships while protecting the financial security of parents and grandparents, but with clear communication and goals, experts said.
The ideal time is to start talking about money, goals, savings and responsibilities when your child is younger, Healy said. She starts with how to use the money, allowances, gift money, or summer work, she suggested.
“As time passes, there are some financial responsibilities,” she said. “We tie it to milestones such as graduation, age, employment, and more to help adult children prepare them mentally and emotionally.”
If that window is closed and your child is a full-fledged adult who already enjoys subsidies for mobile phones, streaming services, rent and health insurance, experts said a financial advisor is enlisted.
According to an Ameriprise survey, 96% of parents with adult children who work with financial advisors are confident they will meet their top three financial goals. 78% said it would help advisers make money decisions related to adult children.
“Advisors have different relationships with parents and adult children,” Healy said. “They are trustworthy resources and can encourage their work and conversation to come to a good place.”
Medora Lee is a money, market and personal finance reporter for USA Today. You can contact her at mjlee@usatoday.com and subscribe to our free daily money newsletter for personal finance tips and business news every Monday to Friday morning.
