- Many parents see adulthood as the most expensive stage educationaccording to the new Merrill Lynch Report – 79% provide financial support to their adult children, contributing $ 500 billion. US spent annually.
- This is twice as much as parents retirement – One of the many financial sacrifices that they make for the financial support of their children.
- Parents spend money on all the essentials, such as rent and luxury items, such as holidays, for your children.
- However, this financial support can make parents financially dependent on their children on the way.
Average cost of raising a child under 18 years old makes more than 230 000 US dollars – but this number only increases when children leave the nest. In fact, many parents believe that this is the most expensive stage of education, according to the new version of Merrill Lynch “The financial journey of modern education: joy, complexity and sacrifice” report.
The bank interviewed more than 2,500 American parents and found that 79% of parents continue to provide financial support for their adult children, which is about $ 500 billion a year. This is twice the amount they save for retirement – $ 250 billion a year – according to the report. According to Merrill Lynch, there are 173 million parents in the United States.
“When emotions and money are intertwined, parents risk making financial decisions that could jeopardize their financial prospects,” the report says.
Seventy-two percent of parents showed that they put the interests of their children before their own need to save on retirement. In addition, 63% of parents reported sacrificing their financial security for their children. In particular, Asian, Latin American and African American parents are more likely to give up the financial security of their children, the report says.
Half of the respondents polled pulled money from their savings account, and a quarter would take on debt or take money from their retirement fund. Slightly less than 20% expected retirement, while a small percentage left the retirement, if it meant helping their children.
Parents buy basic necessities and luxury items for their adult children and let them live at home
So what exactly do parents pay? The answer is both big and small, with parents who cover needs, such as rent or mortgage, as well as luxury items, such as holidays.
According to the report, out of a total of $ 500 billion. Which parents spend on adult children, college education is about one quarter; groceries and food cost $ 54 billion a year, and the cost of a cell phone is $ 18 billion, with many parents covering the full cost, rather than just passing a few dollars.
But this amount does not include items of a large ticket – about 60% of parents help pay for the wedding of their adult child and 25% help pay for the first house of their child. According to the report, Asian parents are likely to provide financial support for their adult children, especially when it comes to education costs.
“These financial contributions add up, and many parents do not know how much they spend on their adult children,” the report says.
But financial support is also provided in the form of providing a place to live. According to the report, 31% of early adults between the ages of 13 and 34 live with their parents – 50% more than in 1960, and a higher percentage than in the same age groups who live with their spouse.
“Compared to all that I spend on the maintenance of my two adult children, their boomerang back and living at home will be relatively inexpensive,” said one of the focus group participants.
Merrill Lynch results coincide with similar results. Index of financial security in the countryin which it was discovered that more than half of the American millennia received financial assistance from a parent, guardian or family member since the age of 21, Earlier reported by Business InsiderAbout 37% receive money every month, and more than half (59%) receive money a couple of times a year. The index also found that Americans leave the nest later in life than before.
Millions of parents are “stuck” between helping their children and their parents
While millennial people rely on their parents for money, many parents also begin to rely on their adult children for advice and emotional support, the report says.
“Most of the majority parents agree that it is the responsibility of the parents to provide financial assistance or home to the child in need and that it is the child’s responsibility to do the same for the parent,” the report says. "Millions of parents find themselves in both roles when they become" sandwiched "between supporting their children and supporting or acting as educators for their elderly parents."
The report also raises an important question – by sacrificing their financial security, do parents increase the likelihood that they will rely on their children financially on the way?
Almost 50% of respondents regret that they do not create clearer borders with their children about the financial support they are willing to provide.
According to the report, “the hearts of parents can encourage them to be generous and supportive, while their leaders can tell them to secure their financial resources and free their children from the need to support them in the years to come.”