One of the biggest threats to the financial security of many retirements isn’t the threat of Social Security reducing payments, poor planning or even underfunding. It isn’t getting much press right now, but our kids are becoming some of the biggest drags on our golden years.
A recent Merrill Lynch and Age Wave survey came up with some unexpected numbers, large numbers, associated with boomers and Gen Xers supporting or helping support their adult children.
The numbers indicate that 31% of people between the ages of 18 and 34 will boomerang back to their parents’ homes – “boomerang” meaning move back in. That’s almost a third! But that amount accounts for only 20% of all the money given to adult children.
But here’s a number that really floored me: 79% of the survey’s participants reported they provide some support to their adult children, and that support averages $7,000 per year.
Estimates put the total amount of money given to adult children by their parents at $500 billion per year. That works out to twice the amount that parents are putting into their own retirement accounts.
And that $500 billion does not include special expenses like money for a down payment on a house or a wedding.
Just cellphone bills alone for adult children paid by their parents account for $18 billion a year.
And an amazing 63% of the participants in the survey reported that they would sacrifice their financial security to assist their adult children financially.
If your kids have already finished college and moved on, or if you’re expecting that to happen soon, based on the numbers I’m seeing I wouldn’t necessarily plan on a cash flow windfall when they leave. There’s a very good chance they’ll be returning.
Subsidizing our children in our 50s, 60s or even our 70s is going to come back on us.
And I haven’t touched on the amount of student loan debt that parents are being held responsible for or are paying on behalf of their adult children. It’s gotten so bad some seniors are having their Social Security garnished to pay student loans that their children defaulted on.
This is a tough situation. As the numbers indicate, most parents don’t want their kids to have to struggle or appear to be doing less well than other people their age – but it sounds to me like it’s time for a reality check.
Helping our children is expected of us, but we can’t allow it to be one more reason to wake up broke in your 80s.