Parents Are Paying Their Adult Kids' Bills
Many parents help cover rent and home purchases as young adults struggle to afford living independently. About one-third of 18- to 34-year-olds still live at home.
WASHINGTON — Millennials may be pushing 40, but many are still swiping cards linked to their parents' accounts. Gen Z is cashing in even harder, racking up an average of $1,813 in monthly support from mom and dad, the March report from Savings.com reveals.
Nearly half of parents surveyed, 47%, say they’ve put their own financial future on the back burner to keep their children afloat. But the vault is creaking closed, as 37% of parents say they’ll cut off support in the next two years.
Right now, parents are covering everything from health insurance to cellphone plans, with 87% funding their kids’ food and 66% helping with rent, according to Savings.com. And on average, working parents are spending more than twice as much on their adult kids as they are on their own retirement: $1,589 versus $673 a month.
Inflation hasn’t just hit the gas tank. It's also blown up the grocery bill and crushed hopes of affording solo living, according to the report.
And while these young adults work full-time — 92.5% of Gen Z adults are employed, per the report — their salaries just aren’t enough to survive today’s economy.
Millennials, too, have boosted their retirement savings thanks to recent strong market performance, but many young adults still can’t afford to live on their own. About one-third of Americans aged 18 to 34 still live at home, according to U.S. Census Bureau data.
“Housing is a big issue and parents are helping more and more with rent and home purchases,” Carolyn McClanahan, a financial planner in Jacksonville, Florida told CNBC.
Nearly 90% of parents would make more sacrifices if it meant helping their adult children get by, the Savings.com report notes. After all, if a recession hits first, Savings.com warns, pulling support too early could leave young adults flailing.
But around 18% of those currently bankrolling their adult children say they don’t expect the handouts to stop anytime soon.
But that open-ended generosity makes financial planners nervous. Parents need to place their own oxygen masks on first, says Ms. McClanahan. As she put it to CNBC: “We are careful to make sure parents don’t gift so much to put themselves in peril.”
Before reaching for the checkbook, Ms. McClanahan advises setting ground rules — and making sure retirement and rainy-day funds are topped off.
“As a general rule, you should set aside money for your own retirement and emergency fund first,” she said.
Still, Gen Z may not be as fragile as their bank accounts suggest. By 2035, they’re poised to become the richest generation alive, bolstered by rising salaries and inherited wealth, according to a 2023 report from Bank of America.
Reports say an estimated $84 trillion is set to pass from boomers and Gen X to younger generations in what’s been dubbed the “great wealth transfer.” For now, though, they’re still living off pizza rolls — bought by parents deferring retirement, one Venmo request at a time.
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