Luckily for many of those young adults, the bank of mom and dad is still open, according to a new study from savings site Savings.com. In fact, nearly half of parents report that they financially support an adult child, and many do so at the expense of their own retirement savings.
What the data says
Savings.com surveyed 1,000 Americans with at least one adult child to find out just how much parents are shelling out to keep their grown kids afloat. Here are some of the findings:
- Roughly 45% of parents said they provide financial help to at least one of their adult children. Almost a third of those adult children were millennials, who are roughly age 27 to 40 now. That's consistent with previous research that found almost 25% of millennials rely on their parents to pay rent and more than one-third of whom have at least one bill covered by their folks.
- The average amount parents are providing for their adult children every month exceeds $1,400, mostly for groceries, cell phone payments and housing costs.
- More than half (57%) of adult children who get that financial help are still living at home with their parents, but the cash mostly flows in one direction: The average these adults contribute to their households monthly is $186.
- Parents a decade or less away from retirement are putting a lot more into supporting their adult kids, to the tune of about $2,100 a month. That’s way more than they’re contributing to their retirement every month, about $643.
- Forty-four percent of those surveyed said they would be willing to pull from their retirement funds to support their children, while 33% said they would be willing to delay retirement.
- Parents are also taking on their offsprings’ student loan debt: An estimated 600,000 parents take on these loans every year, with the average debt coming out to $30,000. According to Savings.com, they’d have $3,000 more every year to fund their retirements if they weren’t paying student loans.
Parental support by age
Most adult children who receive funding from their parents were Gen Zers (age 18 to 26), but Savings.com found many millennials are also getting money from their parents. The percentages of adult children by age group who receive financial support are as follows:
- 18 to 19: 13%
- 20 to 24: 52%
- 25 to 29: 17%
- 30 to 34: 8%
- 35+: 11%
While it may seem many young adults are using their parents as a financial crutch, the economic circumstances they inherited leave them with few other options. The number of people between 25 and 34 who are living at home is almost 16% as of 2022, 7% higher than in 1960. Factors like a widening generational wealth gap, high housing costs and global crises like the pandemic and the 2008 recession are setting young people back financially, Savings.com says.
And while Federal Reserve data shows that millennials’ generational wealth nearly doubled during the pandemic, they’re not keeping up with boomers, who hold more than half of the country’s wealth.
It’s much harder for millennials to purchase property, a major driver of middle class wealth — only 42% of millennials own homes by 30, compared to 51% of baby boomers who were able buy homes by that age.