Parents are responsible for taking care of their children, and that means emotionally, physically, and financially. But at what age or milestone in life should an adult child stop getting financial support from mom and dad? A new survey on financial independence investigated the average age Americans think individuals should start paying for their own bills, including car payments, cell phone bills, and student loans.
The journey to independence has changed in recent years as “helicopter” and “lawnmower” parenting showed us parents that shield their children from failure or consequences of their actions. (First let’s clarify that these adult children can support themselves and have no special needs.) This type of relationship causes parents to enable their adult children to not learn about the good and bad results of their actions or decisions – including financial decision. The data from this new survey reveals an alarming trend: 50% of Americans say they have sacrificed their own retirement savings in order to help their adult children financially. The higher the bill, the longer parents are willing to pay it.
A recent survey asked Americans at what age they thought a person should start paying for their bills. Most of the results expressed the traditional mindset that 18 is the golden age of adulthood — except when it came to major purchases. Car payments and insurance, cell phone bills, subscription services, travel costs and credit card bills all had the majority of total respondents saying that individuals between 18 to 19 years old should be paying for these bills themselves.
As the bill gets more expensive, however, the average age expectation starts to increase and vary by generation. Millennials, Gen X and the silent generation agreed that car payments should be paid at an average age of 20, whereas Gen Z said 21 and Boomers said 19. Overall, respondents said individuals aged 23 should begin paying down their own student loans. One might assume wealthier households are more willing to help pay off massive student loan debt, but that was not the case. Respondents with household incomes under $30,000 said the average age for individuals to start paying their own student loans was 24; households with incomes from $50,000 to over $80,000 said that age should be around 23.
Housing costs also had a higher average age overall, at 21 years old. Gen Z and millennials agreed the average age to start paying rent or a mortgage was 22, whereas Boomers, Gen X and the Silent Generation all said 21.
Sacrificing retirement to help their kids
The most alarming finding of the survey is not that parents are helping their adult children — it is that the majority of them say that helping is hurting their financial futures. Overall, 50% of respondents say they have sacrificed or are sacrificing their retirement savings in order to help their adult children financially. The retirement crisis in America is an ongoing worry for Americans. As companies have shifted away from offering traditional pension plans to employees, much of the responsibility in planning for financial life after work now relies heavily on individuals. Unfortunately, some are struggling to keep up.
A recent survey found that 20% working Americans are not saving any money for retirement, emergencies or other financial goals. Major barriers as to why respondents said they were not saving included not making enough money and large debt payments. As some Americans reach retirement age and realize they may not have saved enough, they find themselves being forced to work longer than planned.
Why is this happening?
Some may argue that financially helping adult children may be turning them “soft.” So why are people doing it? There are a variety of reasons parents might feel compelled to help their adult children financially — and they do not all have to do with spoiling or enabling them.
This is, for better and worse, the new normal because of the evolving approaches parents have taken to raising their children, and it is a result of some of the ongoing financial challenges that many families face, some of which were caused by the financial crisis and the Great Recession. Some of those challenges include a lack of substantial wage growth. Other culprits include the rising cost of education and the rising popularity of higher degrees.
This is the ironic, unintended expense of people working towards a university degree to eventually find good paying jobs and be self sufficient. The way young people come of age has changed somewhat over the past 50 years or even longer — there is no longer a sense of immediate need for young people to enter the workforce, even on a part-time basis. When you are not gainfully employed, you cannot pay the bills — that is when adult children begin to depend on Mom and Dad.
How to set financial boundaries
Although parents might want to help their adult children out by footing their bills, many experts say it might do more harm than good. Many psychiatrists specializing in interpersonal relationships, says parents who are sacrificing their financial futures for their adult children should reevaluate their assistance.
The conversation about cutting off financial assistance to children can be intimidating. Parents who have been providing financial safety nets for their child might worry about how discontinuing the aid might be received. Adult children who have been dependent upon the money might feel as though they are being treated unfairly.
But the longer the conversation is delayed the more likely it becomes for resentment to start building from both parties, especially from the parents if the financial assistance is jeopardizing their retirement plans. You must decide what works best for you and then present that. Start with being honest about that, and then, listen to the child — and maybe come up with a compromise. Overall, prolonging financial support for adult children is not helpful — no matter how much a parent might think it is. That thrill you get of stepping into adulthood — whenever you do that for your child, you are robbing them of that great joy of figuring out and doing something on their own.
If you are looking for a Financial Consultant that can work with you to develop a strong strategy for next year - contact Stephen Westurn (214.240.0701) or Stephen@Westurnconsulting.com for a complimentary session. Check out the website: www.Westurnconsulting.com .
Guiding People Towards Financial Security