Nearly half of the parents in this country can’t get their adult children off the payroll

Photo by Emily Ranquist from Pexels

Thanks to inflation and the Biden economy, Americans are struggling to make ends meet.

The high cost of housing, huge student loan debts, and lack of high paying jobs is killing the American dream for millions of millennials and Ganz’s.

But what is telling is nearly half of U.S. parents are still financially supporting their now adult children.

Parents are supporting their adult children

Food, housing, insurance, and other costs continue to skyrocket, making it more difficult for many millennials and Gen Z adults to head out on their own.

After adjusting for inflation, much of the younger generations’ wages are lower than their parents’ earnings when they were the same age. 

Now, the website savings.com has revealed the results of its third annual report, and it found that nearly half, or 47%, of parents with a child older than 18 are providing some form of financial support to their kids.

The study consisted of 1,000 parents of adult children.

On average, the report found that parents are doling out around $1,384 extra to their children each month, more than twice what the average working parent contributes to their own retirement savings.

To compare, most adults within the “working parent” group of the study contribute $609 per month to their retirement, on average.

The study also uncovered that 61% of adult children living with their parents don’t contribute to any household expenses, including paying rent.

Additionally, 46% of those parents say they give their children money for vacations and discretionary spending, while 18% said they are helping their adult children pay off their credit cards.

Most concerning is that 58% of the parents surveyed said they have sacrificed their own financial security for the security of their children.

Compared to last year, that number was much lower at 37%.

Supporting grown children can cause serious financial strain on older adults, especially during an economic downturn that puts their retirement at risk.

Parents should have a solid financial plan

Carolyn McClanahan is a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

She spoke with CNBC about the study and said that parents should “have a good financial plan for themselves, then budget how much they can give their kids.”

McClanahan said parents should try to set boundaries and develop a timeline before they provide financial support.

That plan should take their own retirement plans and financial goals into account, including saving for long-term healthcare costs and paying off debt.

She said that everyone should put money aside for retirement and emergencies first as a general rule. 

Isabel Barrow, director of financial planning at Edelman Financial Engines, said that parents can offer some financial support, but their kids should also be doing things to support their own financial futures.

“If they have income, they have a job, they can save. That needs to be their commitment to you,” said Barrow.

Informed American will keep you up-to-date on any developments to this ongoing story.