The Bank of Mom and Dad

Half of U.S. Parents Would Retire Later to Support Adult Children Financially

As debt looms as the biggest obstacle, many willing to sacrifice their own comfort in retirement

CHICAGO, ILLINOIS–(Marketwired – Dec. 23, 2015) – American parents are increasingly concerned about their adult children’s financial situation and are prepared to put their own financial well-being at risk in order to support their kids, according to a report issued today by the BMO Wealth Institute.

The report, entitled “The Bank of Mom and Dad – a source of comfort for everyone,” found that parents with children aged 18-34 would be willing to make the following sacrifices in order to provide financial support for their children:


  • Retire later than planned (47 percent)
  • Have a less comfortable retirement (34 percent)
  • Save less for retirement (30 percent)
  • Take on debt (25 percent)

Make withdrawals from their retirement savings (20 percent)

The willingness of parents to make these sacrifices reflects the anxiety they have about their adult children’s future well-being. They are most concerned that their adult children may have:

  • Financial problems caused by debt (42 percent)
  • Difficulties achieving financial independence (33 percent)
  • Insufficient or lack of employment (26 percent)

“Parents want to see their children reach their potential and become successful adults, so it’s not a surprise that they are willing to make sacrifices that could affect their own financial situation to benefit their children’s well-being,” said Stephen Williams, Co-Head, U.S. Financial Planning Strategy, BMO Private Bank. “A financial professional can help parents who have competing priorities reach their own financial goals, including retirement, and incorporate any financial support they provide their children into a comprehensive financial plan.”

Providing financial support to one's children isn't a new phenomenon... however, the need seems to be greater today

A Financial Plan for a New Generation

Providing financial support to one’s children isn’t a new phenomenon – 40 percent of parents indicate that they received financial support from their own parents when they were young adults themselves. However, the need seems to be greater today. According to the report, twice as many parents (81 per cent) say they expect to provide their adult children with financial support.

“Parents need to keep in mind that today’s young adults face unique financial challenges and may require different levels of support than they themselves received,” said Mr. Williams. “If parents and children have frank conversations with each other about the amount of support they expect to provide or receive, they can avoid misunderstandings that could put their financial situations in jeopardy.”

The report offers parents the following financial planning tips:

  • Teach children about money from an early age
    Gaining an understanding of the basics of personal finance at a young age can help set up a child for future financial success (and independence).
  • Benefit from a Roth IRA
    A Roth IRA can make savings more tax efficient and extend parents’ ability to use their resources to meet financial goals. Although the amount that can be contributed annually to a Roth IRA is limited by IRS guidelines, income earned in the account is generally not subject to any federal or state taxation.
  • Use Gift Tax rule exceptions
    If appropriate, take advantage of exceptions in Gift Tax rules that can help to increase the benefit available to children and dependent parents. For example, gifts made for tuition purposes or to pay medical expenses are not subject to the Gift Tax.
  • Leave a legacy of financial comfort
    Parents can ensure that their estate plans, including wills, provide for their children adequately. Proper insurance planning to supplement income of a surviving spouse or to support children who may be struggling financially is also critical.

To view a copy of the full report, please visit:

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About the BMO Wealth Institute
The BMO Wealth Institute provides insights and strategies around wealth planning and financial decisions. The Institute’s team of professionals have deep expertise around all aspects of wealth planning including retirement, estate, tax and insurance.
About BMO Private Bank, a part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high-net worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.
BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member FDIC. Not all products and services are available in every state and/or location.