Study: 63 Percent of Parents Say They Sacrificed Own Financial Security to Help Adult Children

By:
Chris Gaetano
Published Date:
Apr 24, 2019
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A recently released study has found that the vast majority of parents have given at least some financial support to their adult children, and for many it has come at the expense of their own financial security, according to MarketWatch. The study, conducted by Merrill Lynch, found that 79 percent of parents have supported their children financially, 72 percent said that doing so has impacted their own plans for retirement, and 63 percent said that this support has come at the expense of their overall financial security. Another recent study, from Bankrate, found that half of parents said their support has affected their retirement plans, and 17 percent said it has done so significantly. 

Parents, in general, seem to be supporting their children more and more. Another Merrill Lynch study, from last year, found that parents spend about $500 billion a year to support their adult children, and that college, weddings, groceries, rent, cable, gas, and other expenses big and small characterize such spending. The study found, in fact, that parents spend twice as much subsidizing their adult children between 18 and 34 years old than they save for their own retirement. Despite many adult children having full-time jobs, a full quarter of millennials said they rely on their parents for at least some financial support. 

One factor might be that social mobility appears to be slowing down. Among men born in the 1940s, it was found that 65 percent worked in a higher status job than their parents versus only 42 percent of those born in the 1980s. Upward mobility also declined in terms of income. Of those born in the '40s, about 90 percent made more money than their parents, but of those born in the '80s, just 50 percent did. Women, it was found, experienced less occupational mobility than men until you get to cohorts born after 1950, at which point the trend runs parallel with men.

Another issue is that many young professionals came of age during an international economic crisis, as a Federal Reserve study found that the recession hit those born in the 1980s the hardest. It found that wealth in 2016 of the median family headed by someone born in the 1980s remained 34 percent below the level the Fed predicted based on the experience of earlier generations at the same age. The corresponding shortfalls of the 1960s cohort (–11 percent as of 2016) and the 1970s cohort (–18 percent) are worrying but are much smaller than their respective 2010 and 2013 shortfalls. Alone among the six decadal cohorts that the report studied, the typical 1980s family lost ground between 2010 and 2016, falling even further behind the typical wealth life cycle. The Fed said this represents a missed opportunity because asset appreciation is unlikely to be as rapid in the near future as it was during the recent period. 
 

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