Half of parents financially support adult children, $1,384 monthly on average

Nearly half of the parents with adult children over the age of 18 are providing financial support.

From food purchases to phone bills, health insurance, and car insurance, 47% of parents with children ages 18 or older provide financial help, according to the Savings.com report.

Han, who has much reduced his living expenses due to the high cost of living, spends $2,000 a month to support his child, who graduated from college last year. “I thought he would be able to find a job after college, but he hasn’t found one yet, so I’m spending about $2,000 a month on rent and his living expenses,” Han said. “If he doesn’t find a job, he’s considering going to graduate school, which means he needs longer financial support.”

LA resident surnamed Kim said, “She got a job earlier this year, but she doesn’t make enough money to live on her own, so she moved in,” adding “And I’m paying $1,000 a month for my child’s auto loans, insurance, and cell phone costs to commute to Orange County.”

Parents spent an average of $1,384 per month on financial support for their children. For parents who are not yet retired, the average was $1,476, $92 more per month.

Parents generally gave more financial support to their Gen Z children than to Millennials. They financially assisted Millennials with $907 per month, compared to $1,515 for Gen Z, which was $608 more. This is likely because they are more Gen Z currently in college or at a lower starting level in the workforce.

The Pew Research also found that 44% of adult children received help from their parents. The report shows that parents are still financially supporting their children in their late 20s and early 30s.

Compared to their parents of the same age 30 years ago, Millennials and Gen Z are much more advanced in terms of education, employment, and income. Notably, Gen Z is more likely to have a college degree and work full-time, and women are more educated and earning more than their parents.

However, the truth is that they are facing significant financial challenges that their parents did not face, including soaring food and housing costs. When adjusted for inflation, their incomes are lower than what their parents earned in their 20s and 30s, while student debt is higher, the report noted.

The average student loan debt adjusted for inflation, was $6,000 to $7,000 in 1992, according to Pew Research. In 2022, adults ages 25 to 29 had an average debt of $16,000, and adults ages 30 to 34 had an average of $20,000, a two- to three-fold increase.

The proportion of adult children still living with their parents is also high. About one-third of young adults between the ages of 18 and 34 lived at home with their parents.

However, 61% of adult children living with their parents do not contribute to the household finances at all, the study found.

For parents approaching retirement age, supporting adult children when their own retirement finances are not secure is a significant financial drain, the Savings.com report said. The average monthly retirement contribution for non-retired parents supporting adult children is $609, less than half of what they spend to help their adult children.

That’s $1,384 a month, or $17,000 a year, that parents could be spending on personal expenses, vacations, and retirement.

Indeed, 58% of parents say they have sacrificed their own financial security for their adult children. That’s a 57% increase from 37% a year ago.

“Parents need to create a financial plan and budget how much they can afford to give to their children,” said Carolyn McClanahan, a financial planner at Life Planning Partners, stressing that retirement and emergency funds should be secured first.

BY EUNYOUNG LEE, HOONSIK WOO    [lee.eunyoung6@koreadaily.com]