Half of American Parents Help Adult Kids Financially -- Here's How to Do It Without Derailing Retirement
Key Points
Half of all parents with adult children provide regular financial support.
The average support per adult child amounts to $1,474 per month.
Some parents contribute more to their kids than to their own retirement accounts.
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For most parents, retirement planning probably doesn't include supporting adult children. That's one of the reasons a Savings.com study came as a surprise. The study found that about half of all parents pay at least a portion of their adult children's bills, with an average monthly payout of $1,474. Compounding the issue, a recent Gallup poll revealed that 40% of American adults have no retirement savings plan at all.
Given the cost of living, it's easy to understand why a parent might want to bail their children out financially. After all, it's difficult to watch someone you love struggle. And yet, working parents who offer financial support report contributing twice as much to their kids as they do to their own retirement accounts.
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What parents are willing to sacrifice
For most parents, providing for their adult children means sacrificing their own lifestyle. In the study, 47% of parents admitted to sacrificing their financial security to help support their kids. Another 40% said they feel pressure to hand their money over, even when it meant stretching their resources uncomfortably.
Here's what parents say they're willing to do to support their adult children financially:
| What They're Willing to Do | Percentage |
|---|---|
|
Refinance their home |
13% |
|
Come out of retirement |
17% |
|
Take on debt |
31% |
| Retire later |
35% |
|
Pull money from savings or retirement account |
50% |
|
Live a more frugal lifestyle |
62% |
Source: Savings.com.
Why "Just stop!" doesn't work
As parents break down what they're spending money on, it becomes clear why some expenditures feel necessary. After all, 83% of parents who give money to their kids say it's for groceries or food. Telling a loving parent to stop giving their child money for food won't move the needle. Here are some of the other expenses parents admit to springing for:
| Expense | Percentage |
|---|---|
| Student loans | 23% |
| Car | 44% |
| Tuition or other school expenses | 45% |
| Health insurance or healthcare | 54% |
| Rent or mortgage | 63% |
However, there are less vital expenses. For example, here are some of the other costs parents admit to covering for their adult children:
| Expense | Percentage |
|---|---|
| Investments | 14% |
| Credit cards | 21% |
| Discretionary spending | 44% |
| Leisure/vacations | 46% |
| Cell phone | 65% |
Interestingly, 53% of the parents in the Savings.com study said they feel responsible for financially supporting their grown offspring. However, that percentage is down from 61% in 2024. Further, more than 33% of parents who give money to their kids say they plan to cut off support within the next two years, which leads one to wonder if a change is in the air.
While it feels good to be able to help a child (regardless of age), doing so at your own financial peril can lead you down a dangerous path. Perhaps there's a common-sense way for parents to ease their kids out of dependence and regain the ability to focus on their own financial futures.
Prioritize
For those parents who intend to wean their children off financial assistance, it's a good idea to sit down with them to determine which expenses represent necessities and which the kids can pay for themselves or do without. For example, housing, food, and healthcare are necessities, but discretionary spending and investments are absolute non-essentials for a person who can't cover the cost of living. And paying for a grown adult's vacation or leisure activities instead of saving for retirement borders on self-sabotage.
Questionable expenses include cellphone, car, and credit card payments. Getting by without a cellphone in 2025 may be tough, but perhaps that means having only a basic plan until the adult child can pay for a more elaborate plan themselves. In a city with abundant public transportation, selling the car may be a wiser option than expecting Mom or Dad to risk their finances in retirement. No one learns to control the use of credit cards when someone else is responsible for paying the bill.
In other words, it's possible to display tough love while treating a grown child with respect. After all, it's the parents who could find themselves in retirement with little money to pay basic food, housing, and healthcare expenses.
Again, there's no shame in wanting to help your children, but when it's at the expense of retirement and estate planning, no one wins. Coming up with a compromise that nobody loves but nobody hates may be the best way to help all parties involved.
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