Amid inflation, half of parents financially support their adult children
To cope with rising costs, many young adults are turning to a likely safety net: their parents.
Whether it’s buying groceries, paying for their cell phone plan, or covering health and car insurance, 45% of parents with a child 18 or older provide them with at least some financial support , according to a recent Savings.com report.
On average, these parents spend more than $1,400 a month to help their adult children make ends meet, according to the report.
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Over the past year, inflation has posed a challenge to those trying to achieve financial independence. Soaring food and housing prices are just a few of the significant hurdles faced by young adults just starting out.
For parents, however, providing for their adult children can be a huge burden at a time when their own financial security is at risk.
And parents nearing retirement are contributing the most to their children — to the tune of about $2,100 a month, on average, while putting just $643 a month into their retirement accounts, Savings.com found.
Overall, U.S. retirement readiness has declined as the economy has faltered, Fidelity’s 2023 Retirement Savings Assessment also found. In 2020, 83% of savers had enough income to cover estimated expenses during retirement. Now only 78% do.
With their retirement security at risk, nearly half, or 48%, of American retirees believe they will outlive their savings, according to a separate report from Clever Real Estate.
“It has to go both ways”
“Everyone is everyone’s lifeboat when it comes to hitting an iceberg,” said Laurence Kotlikoff, an economics professor at Boston University and president of MaxiFi, which offers software for financial planning.
However, “it has to go both ways,” Kotlikoff said. “Parents are very supportive, and kids have to realize that the trade-off here is that they’re going to be expected to take care of their parents.”
Having an open dialogue can help, he added. “Once this conversation is started, it can continue for the next 40 years.”
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