Nearly half say it has negatively impacted their retirement savings
WINDSOR, Conn., Oct. 29, 2014—A new LIMRA Secure Retirement Institute study finds that 6 in 10 American parents provide financial support to their adult children, which could undermine their retirement readiness.
“Research shows that Millennials have weathered the most significant repercussions from the recent economic downturn. While Millennials are the most educated generation in history, nearly 4 in 10 are unemployed and many more are underemployed1,” said Deb Dupont, associate managing director, LIMRA Secure Retirement Institute. “Parents of Millennials, even those over the age of 22, are providing considerable support to their children at a time in their lives when saving from retirement should be a priority.”
Parents are most likely to help pay for cell phones/mobile service, rent/mortgage, college expense/loans debt, and entertainment — movies, sporting events, etc. (chart). Thirty-seven percent of U.S. households with adult children indicated that they did not provide any financial support.
The study also found the majority (57%) Americans with adult children have at least one adult child living at home. Nearly three quarters of households with adult children ages 18-22 have at least one adult child residing in their home.
“Only 45 percent of parents who have financially supported their adult children in the past year say it has negatively impacted their retirement savings,” noted Dupont. “We believe people are likely to underestimate the collective impact of incremental costs. Prior LIMRA Secure Retirement Institute research found that more than 50 percent of pre-retirees have less than $100,000 in financial assets. Even $100,000 in total savings will not be enough money to fund the 20 to 30 years these individuals are likely to face in retirement.”
The findings are based on a nationally representative survey of 1,009 Americans. The survey was fielded in July 2014.