As the cost of living soars across the country, young Americans are increasingly relying on their parents to help cover their living costs.
Half of All Parents
A new study has found that approximately half of all U.S. parents with adult children are still financially supporting their grown-up offspring, and this number is likely to rise in the coming years.
Adult Children Need Help
According to the report by Savings.com, 47% of U.S. adults with one or more children over the age of 18 are helping them to cover basic living costs.
Covering Basic Living Costs
Participants reportedly gave money to their children for rent, groceries, phone bills, tuition fees, health insurance, and more. Food and groceries made up the bulk of these payments.
Paying More Than Their Parents
These parents are spending an average of $1,384 a month to support their children, who are currently struggling with living costs that far exceed what their parents had to pay 20 or 30 years ago.
Higher Student Loan Debt
Not only are Gen Z and Millennials paying considerably more for products and services while earning less than previous generations (when adjusted for inflation), but they are also saddled with higher student loan debt.
22 and Beyond
The average age of young adults still receiving financial support is 22, but the report shows that adults still rely on their parents in their late 20s and beyond.
Across the Generations
Of the parents surveyed, 21% were providing support for Millennial and Gen X children (between the ages of 28-59). The rest supported Gen Z children between 22 and 28 years old.
Financial Independence at 25?
On average, most survey participants felt that adults should become financially independent at 25, though many were still sending money to children who were older than 25.
A Burden for Older Parents
While the unsustainable rise in living costs is a major issue for younger generations, the Savings.com survey also highlighted the disproportionate burden of this unaffordability on older parents.
Diverted From Retirement Accounts
One of the primary points of the issue is that, on average, these parents are spending more per month on their adult children than on their own retirement accounts, which is just $609 per month on average.
“Visibly Harming Retirement”
The report claims that for these aging parents, “helping their kids is visibly harming their retirement savings.”
Rising Stress for Parents
And this is not lost on the adults in question. 75% of parents who are still supporting adult children feel some degree of stress about their ability to retire comfortably.
A High Sacrifice
Over half (58%) acknowledged that they had sacrificed their future financial security to help their children, which marks a staggering increase from the 37% who said the same in a 2023 study by Savings.com.
Price Rises Set to Continue
These figures are unlikely to change in the coming years, either. The U.S. Department of Agriculture has predicted that food prices will rise by nearly 3% and overall grocery store purchases by 1.6%.
Parental Duty?
It’s a sticking point for many parents who feel obligated to help their children even beyond their own capabilities.
Kimberly Palmer, a representative of U.S. personal finance company NerdWallet, offered advice to parents who were feeling the squeeze on their finances.
Consider Your Finances
She recommends all parents look closely at their finances before figuring out how much to send their children. She also suggests non-monetary ways to help, like helping with job searches or letting them live at home.
Set Monetary Boundaries
However, according to Palmer, setting clear monetary boundaries with children is the most effective move.
“Maybe there’s an end date that you say to them, ‘OK, I can help you for the next two months or up until a specific date,’” she said.
“Help Your Children Reach Financial Independence”
“But it’s not just endless because that can go on and cause financial stress,” Palmer continued. “The ultimate goal here is to help your adult children become financially independent.”
A Mix of Economic Factors
The report concluded by acknowledging the “mix of economic factors” that have driven younger adults to seek more financial help from parents than the generation before them.
The Report Concludes
“It’s tempting to simply say that today’s young adults are just mooches and that a strong foot in the rear will launch them into normal, independent adulthood,” the report shared.
“But it doesn’t solve or even properly describe the economic factors at play, such as rising housing costs.”
Looking to the Future
It suggested that these economic factors may be “greater than any one family can solve,” and it would be up to the country as a whole to “contend with a changing labor market and rising prices” that are placing undue stress on older parents and adult children alike.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
