Parents paying the price: Half of US families supporting adult kids

ORLANDO, Fla. – Inflation has cooled since its peak during the pandemic, but the shock waves are keeping the cost of living high.

As a result, a growing number of American parents are stepping in to help their grown kids make ends meet. A recent survey from Savings.com found that half of all U.S. parents with adult children are providing regular financial support, paying about $1,500 each month on average (or almost $18,000 annually). 

And that help often comes at a steep cost — working parents are contributing more than twice as much money to their adult children as they are to their own retirement accounts.

[Hear from experts on the best way parents can prepare for their retirement in the video below]

Jude Wilson, a Certified Wealth Strategist at Centrus Financial tells News 6 that this is not just happening to wealthy families. “These are everyday people—teachers, police officers—they really don’t have that extra to spare,” he said. “So, it’s doing more damage to them in their future because their immediate need is to make sure that their son or daughter is okay now.”

That’s a dangerous trend, he warns, because retirement accounts are turning into emergency lifelines—not for the account holders, but for their children.

Wilson says the financial impact is significant. “If you’re ten years away from retirement and you’re spending 18,000 a year to help support your child. Well, if you just got an average rate of return of 6%, that’s almost a quarter of a million that could have been used for yourself and  your own retirement.”

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This trend of parents bankrolling their grown kids took off during the pandemic, and Savings.com has been reporting on it since 2022. Beth Klongpayabal, an analytics manager with the company, told News 6 that this is the first time since beginning their annual research that the percentage of parents financially supporting adult children reached 50%, it was 47% last year and 45% in 2023.

“It is a trend. We are seeing that more and more parents are supporting their adult children longer and longer,” Klongpayabal explained. The survey found that only 37% of parents plan to end their financial support within the next two years. 

“I think they just don’t know how to cut the strings,” Klongpayabal remarked.

Wilson said the key is establishing a clear time frame.

“There has to be a beginning and an end,” he said. “Create a contract with your adult child. It may not be legally binding, but at least psychologically it gives them the sense that this is not indefinite support.”

That is especially important for parents already in retirement.  Wilson warns, “If we don’t take care of this problem, you will have to find an alternative source to supplement your retirement. And that might mean going back to work, which no one wants to hear.”

In fact, only 17% of parents in the study said they would be willing to return to work to help their kids. Read the full Savings.com study here.

If you are supporting an adult child and you are concerned about your retirement, experts at AARP say you should create a clear plan with specific timelines for reducing or stopping financial support. This involves open communication, setting expectations, and potentially offering support while also encouraging independence. It is also crucial to be understanding of the child’s perspective and allow them time to adjust to the changes.