Adult children may be sapping their parents' retirement funds


Parents are attempting to push their adult children out of the nest — but they’re not budging, and it’s coming at a cost.

皮尤研究中心(Pew Research Center)的数据显示,在疫情最严重的时候,18-24岁的年轻人中有52%搬回父母身边。But more than two years later, 40% of parents are still hosting their adult child in their home, and in many cases, financially supporting them.

The rising cost of rent, along withthe need for financial support, are the top reasons young adults are struggling to make it on their own. Yet parental support may be threatening the financial security of older generations, especially when it comes to theirnest egg for retirement.

“A lot of parents were in the sandwich generation, where they were taking care of older parents while also caring for their younger children,” says Delvin Joyce, a financial planner at Prudential. “Now, their parents are getting older and their health is fading, and their older kids are moving back into the house. It's having a compounding effect on the lack of preparedness for retirement, because people are feeling pressured to reach into their retirement savings for their younger kids as they move back in.”

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A survey by Thrivant, a financial services firm, found that 35% of parents with adult children at home have compromised their retirement savings to help their children financially. Separate research from found that 50% of parents give their adult children $1,000 a month in financial support, and 25% are willing to dip into their savings and retirement to cover the expense.

“Because most people are not really prepared for their own retirement, having to dip into some of those limited retirement savings to support an older kid is not really something that most Americans are prepared to do,” Joyce says. “It’s just having a disastrous effect on people in their retirement readiness.”

That miscommunication could be due in part to the stigma arounddiscussing financial matters在家庭成员中:Thrivant的数据发现,70%的父母在与他们住在一起时,没有讨论过资金管理问题,也没有要求他们的孩子出资。与此同时,皮尤研究数据中心(Pew Research Data)发现,尽管72%搬回家的孩子认为父母可以在经济上支持他们,但只有21%的父母同意这一观点。

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The guilt many parents feel that their children may be struggling financially also keeps parents and children from having honest conversations around money, Joyce says.

“In our country, we make people feel terrible if they're not paying for their kids' college 100%, or if they make their grown kids pay rent in their house,” he says. “A lot of people feel that they owe their children and don’t necessarily want to have to take resources away from them as they’re just getting started in life.”

In order to preservetheir own financial wellness, parents need to get vocal about their financial situation, and figure out ways to offset the cost of supporting an adult child. Joyce recommends asking adult children to chip in with things like landscaping or house cleaning if they can’t afford to make a monetary contribution to the bills.

If a parent or child is in dire financial straits, taking out a 401(k) loan could be less damaging to a person’s savings, since they won’t be penalized or taxed like they would if they used their distributions, Joyce says. However, both parents and their children should work together to find a solution that puts both parties’ financial health at ease.

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“As children, our parents are superheroes and so of course we overestimate how well they've done financially,” he says. “As parents, we don’t want to tell our kids, ‘Hey, maybe we haven’t done as well as you perceive.’ If you're a parent who has a grown adult child moving back into the home, it's a fantastic opportunity for you to help them clarify their own goals and objectives.”

Joyce also recommends involving children in financial planning conversations before they head back into the home. He often advises clients to bring their children to meetings where their finances are discussed, which can help them start to understand money and build their own financial habits at a young age.

“When I meet with clients in their 60s, the number one thing they always say is, ‘Wow, I wish I had started this process in my twenties,’” Joyce says. “Being able to set that foundation at a young age really gives them an opportunity to get a head start on their financial wellness.”

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