The majority said they are happy to help, but some admit concerns about its impact on their retirement plans
Financial independence from one’s parents is among the most important milestone of adulthood. But based on a new study focused on Canadian parents with adult children, that goal seems to be getting harder to achieve.
The 2019 RBC Family Finances Poll, which surveyed over 1,000 Canadian parents with millennial children aged 18 to 35 years old, found the vast majority of participants (96%) have financially supported their children in some fashion even in adulthood, and nearly half (48%) said they are still subsidizing their 30- to 35-year-olds’ lives. That includes helping them with:
- Education costs (69%);
- Living expenses including mortgages, rent, and cable (65%); and
- Cell phone bills (58%)
Among those parents, 88% said they are happy to be in a position to extend support. However, 36% admitted they were worried about its toll on their retirement savings, and another 33% expressed concerns that it could prolong their retirement plans (33%).
The cohort of Canadians still supporting their 18- to 35-year-old children estimated that they spend $5,623 a year on average to provide that assistance. That amount tends to decrease over time, as parents who still give their 30- to 35-year-old children a leg up reported spending an average of $3,729 every year.
Most parents who still support their children trust that they aren’t just idly accepting handouts, with 85% saying they believe their children are trying to become financially independent. However, 86% believe that making ends meet is difficult for young adults today, and 53% feel that their own children face such difficulties.
"It's human nature for parents to put their children first, but when it comes to balancing financial needs, the best advice is to pause and take a look at your whole financial picture," said Rick Lowes, vice-president, Retirement Segment, RBC. “Take the time to have a frank conversation with your adult children about finances, plans and expectations. If you can openly discuss your retirement goals alongside their financial needs, it will be much better for everyone in the long run.”
The retirement crunch isn’t just restricted to those helping their adult children. Members of the sandwich generation — typically from Generation X — find themselves between a proverbial rock and a hard place as they extend financial help not just to their children, but also to their own aging parents. That means advisors serving such clients, to help stretch their finances, may end up having to examine the older parents’ financial situation as well.