Young adults are moving back home, and parents are willing to put off retirement to help them.
While most children eventually move out and move on, economic hardship has left many adults reliant on their parents.
Recent research from Savings.com, a coupon and money tips site, shows that 50 percent of parents are supporting an adult child. Most of the adult children are between 18 and 24 years old. However, 1 in 5 adults getting help from their parents are over the age of 30.
“For most of modern American history, it’s been assumed that regular parental financial support stopped with adulthood,” Savings.com’s analytics manager Beth Klongpayabal wrote. “But as our research shows, this is often not the case, and it may be to the detriment of parents as they age and get closer to retirement.”
Dedicated to helping their kids, about a quarter of parents would pull from their retirement savings and delay their retirement so they can continue giving support.
Parents are providing groceries, cell phone service, rent, health insurance, and more. Most kids living at home don’t financially contribute at all to the household expenses. The adult children who do help out contribute about $338 a month – though parents spend about $1,000.
Taking care of another person isn’t cheap. Those with a higher income were more likely to think it’s their responsibility to financially support their adult children.
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The wealthier have more to give
Though parents from all income brackets help their adult children financially, a study from last year showed that parents who provide this support are, on average, twice as wealthy as those who don’t.
According to Savings.com, most parents who give financial support make over $100,000. Young people need help and only the adults from wealthier families are able to get it.
It’s no surprise that young adults are moving back home considering the state of the housing market. Most Millennials haven’t started saving for a down payment on a home. It’s hard to save when many Millennials who are in their “prime earning years” still make less than $50,000.
A quarter of those who have made down payments were only able to because they had help from family.
Let’s talk about money
Wells Fargo surveyed 20 to 39-year-olds expecting to inherit more than $1 million. Nearly three-quarters of them said talking about their inheritance will help them plan for the future.
Still, many survey respondents see economic downturns and changes as a threat to their inheritance.
“With economic concerns and rising inflation,” says a Wells Fargo press release, “the next generation is looking for help setting goals and putting together a plan to meet them.”
But in order to make these plans, families need to talk. Eighty percent of study participants want to hold family discussions about future inheritance.
While children and parents want to have financial conversations, they aren’t necessarily happening.
Most parents acknowledge that it’s important to talk to their children about money, but only about half talk about budgeting and credit. Even fewer parents talk to their kids about saving for retirement.
Even though it seems difficult, discussing money openly is usually helpful for everyone involved. When parents have real conversations about finances, their children often feel smarter and empowered.
“It is more important than ever that we help them meet their financial goals and get the most out of their money,” Wells Fargo wrote, “whether inherited or earned.”
Published by Debt.com, LLC