More Parents Are Financially Supporting Adult Children: Why It’s a Problem

May

More Parents Are Financially Supporting Adult Children: Why It’s a Problem

May 5, 2025

In Retirement Savings, Retirement Tips

By Keya

Supporting adult children comes at a high cost.

And an increasing number of parents are finding themselves doing just that.

Here are some of the key findings of the 2025 Savings.com report:

Half of parents with adult children provide regular financial assistance to their grown kids.
The average monthly support per adult child is $1,474, approximately 6% higher than last year. (Note – this equates to almost $18,000 a year)
83% of supporting parents contribute to their adult kids’ monthly groceries; 65% help with cell phones, and nearly half (46%) pay for vacations.¹

Now, here are the highly problematic findings:

Nearly 50 percent of parents have sacrificed their financial security to help their grown children financially, and most supporting parents feel obligated to assist their children financially.

Working parents who support their grown children contribute over twice as much money each month to their adult children as they do to retirement funds.²

According to the Savings.com report, “The psychological and fiscal impact of such commitment translates directly to parental anxiety. At a time when many Americans haven’t set aside enough funds for their later years, 79 percent of those supporting adult children worry about setting themselves up for a comfortable retirement.”³

In addition, “Nearly 50 percent of providing parents sacrifice financial security for the sake of supported children, and 40 percent felt pressured to give financial assistance even when it meant uncomfortably stretching their resources. […] Specifically, more than 60 percent of parents would be willing to live a more frugal lifestyle to support their adult children, half would pull money from their savings or retirement accounts, and one-third would postpone retirement or take on debt so that they might shift funds to provide for their progeny.”⁴

The report also found that many parents would even be willing to come out of retirement to help their adult children financially.

Read on to see why we feel this is a problem.

Many Parents Are Already Not Saving Enough for Retirement

Financially supporting adult children

The data above is especially alarming because many Americans are not saving enough for retirement.

Experts suggest you plan to have 80% of your pre-retirement income to cover the cost of living in retirement.

According to Northwestern Mutual, “Americans’ ‘magic number’ to retire comfortably in 2025 is $1.26 million. […] However, among Americans who have retirement savings, one in four (25%) say they have just one year or less of their current annual income put aside for it.”⁵

How close are you to that “magic number” of $1.26 million?

Unfortunately, retirement costs continue to rise, and, without actively saving for retirement, you may find yourself unable to retire comfortably.

What the Future May Look Like

Financially supporting adult children

Parents don’t want to think about their children having to financially support them.

But if you don’t save for retirement, where is the money to live on going to come from?

Plus, there is also the very real possibility that you may suffer from health issues that put you in need of care yourself.

Healthcare issues are a major reason adult children wind up financially supporting their parents.

According to Upwave, “Despite what parents expect and want, some might have no other option but to be taken care of by their children. […] Nearly one-third of adult children provide financial assistance to their parents or aging loved ones. […] Parents also might have health issues that force them to get care from their kids, which can place a financial burden on them. Twenty-eight percent of family caregivers spend $5,000 to $19,999 per year on caregiving expenses, and 14 percent spend $20,000 or more per year.”⁶

This is one of the reasons we are hearing about the sandwich generation so much in the news these days.

“23% of adults in the United States are now part of what is being called the ‘sandwich generation,”” according to a Pew Research Center survey.⁷

The sandwich generation consists of adults with a parent 65 years or older who are raising a minor or providing for an adult child.

The sandwich generation faces a significant financial burden from caring for their children and their parents.

In a Policygenius Sandwich Generation survey, “More than 60% of respondents said they are stressed out about how much it costs to take care of at least three generations: their parents, their immediate family (self and spouse) and children.”⁸

Do you want to put your children in this difficult position?

Most people don’t.

Sadly, that’s what your future may look like if you prioritize financially supporting adult children over saving for your retirement.

Put Your Oxygen Mask on First

Financially supporting adult children

In our opinion, this is why it is so important to prioritize your future, even when it feels contradictory.

As a parent, you are hard-wired to support your children.

But there does come a time when supporting them can be a detriment.

Whenever you take a flight, the flight attendant typically provides the following safety instructions:

“Should the cabin lose pressure, oxygen masks will drop from the overhead area. Please place the mask over your own mouth and nose before assisting others.”

The reason we are told to do so is because, if we don’t take care of ourselves, we will be unable to help others.

And also become another person who needs help.

While you may think you are helping your children today, what you fail to see is that you may be hurting them in the future if they wind up having to support you in your retirement years.

Tips for Supporting Yourself First and Your Kids Second in Their Adult Years

Financially supporting adult children

Automate savings. Always pay yourself first. Set up your 401(k) and any savings account to be deducted automatically from your paycheck.
Teach financial literacy at home. Start teaching financial literacy while your children are minors. This should better prepare them for financial independence.
Stay aware of your finances. Understand where you stand financially, especially if you are considering giving some of your finances away. Be aware of what you have available to be able to help your children responsibly.
Add to the budget. If you plan to help your adult children financially, make sure you add this support to your budget. For example, if you are paying for their cell phone bill, make sure you factor this payment into your monthly budget.
Be honest and open. Talking about money may feel awkward, but we feel it is necessary. Your adult children may have false assumptions about your financial situation that make them unaware of how you can or cannot help them.
Get help from a financial advisor. If you find yourself in a place where you feel as if you need to or must help your adult children, reach out to a financial advisor. They can provide suggestions for how to financially help your children while still protecting your financial future.

If you have questions about your 401(k) or if you need help, we’re here for you. Click below to book a complimentary 15-minute 401(k) Strategy Session.

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