At Everything Retirement, we generally adopt an upbeat stance about pre-retiree and retiree financial planning – but from time-to-time a concerning issue comes to our attention and, as part of our commitment to telling it like it is, we report it.
There’s a lot of media coverage out there about how generous the older generation are in financially supporting their adult offspring. But there’s less being reported about a contrary phenomenon: the extent to which adult kids are financially supporting their parents.
According to two exceptionally well-informed sources, The Globe and Mail and The New York Times, this appears to be an emerging problem. As expressed by The Globe and Mail: “The overwhelming reason why adult kids are financially supporting their parents today is insufficient retirement savings.”
This disquieting conclusion is based on a survey among 926 Canadians aged 18 and up who provide financial support to parents. Just over 52% cited a lack of retirement savings, while another 10% said their parent or parents had outlived their savings.
As The Globe and Mail story reports: “Though it’s not much talked about, adult kids are clearly playing a backstopping role in this country’s retirement system. Be prepared.”
Such concerns are not confined to aging Canadians. According to a recent report in The New York Times, “about a third of [US] adults in their 40s, 50s and early 60s said they had given a parent money in the past year.”
The report, based on a research study conducted by AARP, found that:
- About 50% of respondents said they had given at least $1,000, and about 20% said they had given $5,000 or more to help ageing parents in financial difficulties.
- The money was most often paid monthly or weekly to cover the costs of basics such as groceries and housing.
A Big Wake-up Call
The New York Times story quoted George Mannes, senior editor of AARP The Magazine, which published the survey. The dollar amounts cited in the survey were “sobering,” Mr. Mannes was quoted as saying. More than a quarter of the adults who provided financial help to their parents said it had placed a “high” level of financial strain on their family. A third of all midlife adults said they were “just meeting” or “falling short” of expenses.
- Many midlife adults are also supporting adult children, the AARP survey found.
- 19% of those with adult children and aging parents said they were helping both financially.
AARP conducted the telephone survey of 1,508 adults, ages 40 to 64, in the fall of 2019.
Most Americans believe that adult children should support their aging parents, PEW research has found.That may help explain why so many are doing it, even at a risk to their own financial well-being. After all, as Mr. Mannes was quoted as saying, “they raised you.”
Some suggestions for anyone in their thirties or older who has aging parents and is worried about their retirement planning status:
- Initiate a conversation with your parents about their retirement savings.
- Inquire if they have any and, if so, how much and what kind.
- Do they know how long these savings will last? What happens if they run out?
- Explain your ability to provide support (or not).
- Enlist the advice of a professional to help. Our partners at Coastal Community Credit Union, Coastal Community Private Wealth Group and Interior Savings are here to help.