With high food, fuel, and living expenses, many people are experiencing a tightening of their monthly budget. Over the past two years during the COVID-19 pandemic, more young adults have relied on financial help from their parents to make ends meet, according to a recent online survey report. But older adults that have provided assistance to pay for groceries, cell phones, rent, health insurance, vacations, car expenses or tuition often dipped into retirement saving to help their grown kids cover costs.
The survey from savings.com of parents with children 18 and older found that 62 percent of adult children living with their parents don’t contribute to any household expenses. Among those who do pitch in, the average contribution was $338 per month. Of the 977 American parents surveyed for the study, about 28 percent were already retired and almost 1 in 5 adult children who received financial help from their parents were over the age of 30.
Parents who earned more than $100,000 a year were more likely to contribute financially to help their adult children and mothers were slightly more likely than fathers to provide cash support. One in four parents surveyed said they would pull money out of their retirement accounts if their adult child needed financial help. Twenty-two percent said they would delay retirement in order to offer assistance.
The majority of adult children – 65 percent, who received financial support from their parents were in Generations Z (born after 1996) and Millenials (born between 1981 and 1996) comprised 32 percent of young adults receiving financial help.
The research shows a shift in the expectation of parents to provide financial assistance to adult children, even after they are finished high school or college. But, especially as parents near retirement age, these contributions can have a detrimental effect on savings and create stress for older adults trying to plan for a comfortable retirement.