Adult children who continue to rely financially on their parents are putting a drain on the nest eggs of parents who are feeling the impact of these extra costs.
The CIBC poll finds that about one in four parents are spending more than $500 a month to help their adult children cover expenses such as rent, groceries and cell phone bills and some parents say paying these bills is cutting into their personal savings and causing them to delay retirement, as well as their ability to travel and spend money on themselves.
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“Parents may have the will to help their adult kids but they may not always have the means,” says Christina Kramer, executive vice-president of retail and business banking at CIBC.
Highlights of the poll include:
- two-thirds of parents say they have felt the financial impact of supporting their adult children while 34% say they felt no impact;
- among those parents who say they are being affected financially by supporting their adult children, 47% say it has hampered their ability to save for themselves and 20% say they have delayed retirement; and
- about one in four (23%) parents who support their adult children spends more than $500 a month while most spend between $100 and $499.
National data suggests that parents are increasingly supporting their adult children. For example, the most current census by Statistics Canada from 2011 found that 42% of 4.3 million young adults (aged 20 to 29) lived at home, compared to 32% in 1991 and 27% in 1981.
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The most common form of financial support that parents provide their adult kids is free room and board at home (71%) but many contribute towards other bills as well, including:
- 47% – groceries/other household expenses;
- 35% – cell phone bills;
- 23% – car payments or vehicle related expenses;
- 17% – rent for their adult kids to live elsewhere; and
- 12% – debt repayments.
“Living at home temporarily can be a smart way for young adults to save for the future or pay down student loans, and we know that many parents want to help out their adult kids,” Kramer says. “These extra costs can be a burden that delays or prevents parents from meeting financial goals such as retirement, and that’s why both parents and kids need to be mindful of their budgets.”
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