May 8, 2025
The cost-of-living crisis has pushed many young Americans to rely on the bank of mom and dad to make ends meet.
According to a recent report by Savings.com, roughly 50% of Americans with children over 18 provide regular financial support.
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On average, these young adults received $1,474 in monthly support, with the average Gen Z American expected to receive $1,813 per month and the average millennial expected to receive $863 monthly in 2025.
However, parents also face the same cost-of-living challenges as their children. Here’s how their efforts to support their adult children could be putting their financial future and retirement at risk.
Risking retirement
Savings.com also found that working parents who financially support their adult children spend more than twice as much on this support as they do on monthly retirement contributions. On average, these parents are setting aside just $673 for their nest egg, according to the report.
Seniors across the country already face a retirement crisis. Nearly 20% of adults over the age of 50 have no retirement savings at all, according to AARP. Meanwhile, 61% of them worry about running out of funds after they leave the workforce.
A shocking 80% of seniors across America are either financially struggling now or are at risk for economic insecurity in retirement, according to a 2024 survey by the National Council on Aging.
Many parents risk becoming part of this cohort of struggling retirees by contributing more to their children’s lifestyle than their own savings and investment accounts. Here’s how you can avoid the same trap.
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Setting boundaries
Although you may feel obligated to assist your children, you also have an obligation to your future self. Balancing the needs of your retirement planning and those of your children is tricky, but essential.
Talk it out
It is a good idea to have an open conversation with your adult children and to set clear limits and boundaries on your financial assistance. For instance, you could set a hard limit on how much you give them to keep those monthly payments below that of your investment contributions.
Conditions apply
You could also offer financial assistance with strings attached. If your child wants to keep receiving monthly assistance, encourage them to look for new employment, side gigs or further education. You could also offer assistance as a loan with a fixed repayment agreement.
According to Savings.com, 77% of financially supportive parents have specific conditions attached to their monthly payments.
The cutoff
Finally, you could also set an age limit for assistance. Cutting kids off at 25 or 30 seems reasonable, and a time limit could encourage your children to make arrangements for their economic independence.
Savings.com found that while 18% of parents expect to continue supporting their adult children in perpetuity, most hope to wean them off within four years or less.
Setting boundaries could require uncomfortable discussions with your kids. However, managing expectations is critical if you don’t want your plan for financial security to jeopardize your relationships.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
