Baby boomers could hurt their retirement by bankrolling adult children


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Photo/Alan Diaz

  • Parents who pay for their adult children might be
    hurting their retirement.
  • Paying for their children’s expenses could cost parents
    up to $227,000 in retirement savings, according to a NerdWallet
  • Parents need to figure out if they can afford to pay
    for their adult children. If not, they should ask their kids to
    start pitching in.


Parents sometimes pay for their adult children’s expenses — and
it could be hurting their retirement.

In fact, they might be missing out on a quarter of a million
dollars in retirement savings by supporting their adult children,
according to an analysis by

80% of parents with adult children are paying or have paid for at
least some of their children’s expenses, according to a survey on
the spending and saving habits of US adults by Harris Poll on
behalf of NerdWallet.

Looking under the hood of that data, the survey found parents of
adult children are paying or have paid for the following:

  • 56% for groceries
  • 40% for health insurance
  • 21% for rent or housing outside the family home
  • 39% for the child’s phone bill
  • 34% for car insurance

The two most expensive costs are living expenses and college
tuition. And parent’s retirement savings could be $227,000 higher
if they chose to save that money instead of putting it into their
child’s living or schooling expenses, NerdWallet found.

Andrea Coombes, retirement and investing specialist at NerdWallet
said parents should run the numbers to figure
out if they can actually afford to help their children with their

“Parents who need to ramp up their savings rate should have a
conversation with their children. Parents can let their children
know they’re at risk of financial insecurity later in life and
they don’t want to be a burden to their children,” Coombes said.
“And parents should ask their adult children to start pitching in
on some of these expenses. It’ll be good for the parents’
retirement, plus it models to the children the importance of
budgeting, saving and planning for the future.”

To figure out the projected savings, Nerd Wallet found the
average of all those costs, and calculated the potential impact
on the parents’ retirement savings if they paid for their adult
children’s bills for one, three, or five years. They assumed that
the parents would put that money into a retirement savings
account like a 401(k) or an IRA instead of paying for their kids.

Interestingly, over half of all adults surveyed (meaning, not
only those with adult children) said they’re confident they’re
contributing enough to their retirement savings. And almost a
quarter of parents saving for retirement expect their children to
help them financially in some way after they retire.

Helping adult children foot the bill might not necessarily hurt
parents in retirement, if they can afford to pay for everything.
But if paying for college, the phone bill, and groceries comes at
the expense of retirement savings, parents will feel the pain
later on in retirement.

“As parents, we tend to want to do everything we can to help our
children succeed,” Coombes said. “But sometimes we focus on the
present at the expense of the future.”

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