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Millennials are so broke they’re ruining their parents’ retirements

A majority of U.S. parents have made financial sacrifices to set their adult children up for success, many times at the expense of their own savings. 

Nearly seven in 10 parents (68%) who have any children aged 18 or older have made at least one financial sacrifice to help out their kids, according to a recent survey from Bankrate of 2,346 U.S. adults, among whom 773 are parents. 

The most common financial hit? Emergency savings. Over half of parents surveyed say they’ve dipped into their savings to help their adult children, with one in five making significant sacrifices. Nearly half have also put off paying down debt to provide support, and more than two in five parents reported helping at the expense of their retirement savings. Overall, about 16% of parents reported significantly putting off hitting other financial milestones in order to prioritize their children’s financial needs. 

Millennials and Gen Z have both faced major economic events at tenuous times in their lives that have created financial challenges: the Great Recession and a global pandemic, respectively. Additionally, many younger Americans also dealt with skyrocketing home prices and student loan debt at some point in, or even throughout, their twenties and thirties.

It explains why the financial support from parents goes on long after children officially hit adulthood at the age of 18. Across generations, the consensus age range Americans believe children should start paying their own way is between 20 and 23, Bankrate finds. Perhaps unsurprisingly, Gen Z typically believes parents should fund expenses like bills and insurance until at least the age of 21, while baby boomers tend to believe children should be responsible for these types of expenses a full two years earlier.

The financial sacrifices of parents, however, aren’t going unnoticed—at least by millennials. Six out of 10 millennials (ages 27 to 42) feel good about their finances, in part because they had that financial help, according to recent research from Ameriprise Financial. 

Nearly eight in 10 millennials (78%) received some type of financial boost from their families, including help paying for college, down payments on cars and homes, and inheritances. It’s not just small potatoes: 27% received at least $25,000 in financial help. (And that doesn’t account for the savings boost that some have benefited from by living with their parents.)

Yet despite the positives, financial experts generally advise against providing financial aid at the expense of your own security. It’s the same as being told to secure your own oxygen mask first, Marcy Keckler, senior vice president of financial advice strategy at Ameriprise, tells Fortune

It’s natural for parents to want to set their children up for success. “I certainly understand that inclination to want to help out my young adult children,” Keckler says. “At the same time, I want them to have the pride of standing on their own two feet. It’s a great feeling for people to know that you’ve been able to take smart, responsible steps with your finances—even in the face of challenges.”

But despite the hype around millennials getting support from their boomer parents, it’s actually Gen X parents (ages 43 to 58) who are more likely to have made a financial sacrifice to help their adult children. And lower-income households earning less than $50,000 a year are more likely to have taken financial hits for their children than Americans earning more. 

“Offering financial assistance can backfire if it puts your own savings, investments, and financial well-being at risk,” said Ted Rossman, Bankrate’s senior industry analyst. He noted continuing to help out adult children can lead to a “vicious cycle” where if parents overextend themselves, they might end up jeopardizing their own financial security and may need to call on their children for support at some point. 

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Last modified: May 13, 2024