Millennials are draining their parents’ retirement funds to get by

A majority of U.S. parents have made significant financial sacrifices to ensure their adult children succeed, often sacrificing their own savings in the process.

According to a recent Bankrate survey of 2,346 U.S. adults, including 773 parents, 68% of parents with children aged 18 or older have made at least one financial sacrifice. The most common impact has been on emergency savings, with over half of parents dipping into their funds to help their adult children.

One in five parents reported making significant sacrifices, while nearly half delayed paying down debt to offer support. Over 40% also reported sacrificing their retirement savings, with 16% significantly postponing other financial milestones to prioritize their children’s needs.

Millennials and Gen Z have faced challenging economic events during crucial stages of their lives, such as the Great Recession and the global pandemic. In addition to these challenges, many have grappled with rising home prices and student loan debt throughout their twenties and thirties.

These hardships explain why parental financial support continues even after children reach adulthood. Bankrate found that Americans generally believe children should begin paying their own way between the ages of 20 and 23. Notably, Gen Z tends to expect financial support from parents until at least age 21, while baby boomers believe children should be financially independent by age 19.

The sacrifices made by parents don’t go unnoticed, particularly by millennials. Recent research by Ameriprise Financial revealed that six in 10 millennials (ages 27 to 42) feel positive about their finances due, in part, to the financial help they received.

Nearly 80% of millennials (78%) received some form of financial support, including help with college, down payments for cars or homes, and inheritances. A significant portion, 27%, received over $25,000 in assistance, not including the financial boost from living with parents.

Despite these advantages, financial experts generally caution against helping children at the expense of personal security. Marcy Keckler, senior VP of financial advice strategy at Ameriprise, compares it to securing your own oxygen mask first. “I certainly understand that inclination to want to help out my young adult children,” she says. “At the same time, I want them to have the pride of standing on their own two feet.”

While much of the focus has been on millennials receiving financial help from boomer parents, it is actually Gen X parents (ages 43 to 58) who are more likely to make these sacrifices. Additionally, lower-income households earning under $50,000 annually are more likely to help their children financially than higher-income households.

Ted Rossman, senior industry analyst at Bankrate, warns that offering financial assistance can backfire if it puts parents’ financial security at risk. Overextending themselves could create a “vicious cycle” where parents jeopardize their own financial well-being and may eventually need to rely on their children for support.

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