Aug 28, 2023
Personal finance YouTuber Caleb Hammer recently sparked a debate over whether parents have a duty to their children to secure their own finances.
“It is irresponsible of a parent to not be 100% set up for retirement if they have kids, because then it forces them to be financially responsible for their parents,” he said in a video posted July 25 on TikTok.
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The clip was an excerpt from an episode of his YouTube series, Financial Audit, originally published in January.
Hammer argues that parents may not intentionally want to ask their kids for money when they get older, but if they haven’t saved enough for retirement their children may feel morally obligated to put “certain aspects of their life on hold” to help their parents.
The remarks got TikTok viewers’ fingers tapping.
One commenter shared: “My [mother-in-Law] is in this situation. Stopped working at 35 and now she’s 73 and essentially homeless living with us. We had to put our life and goals on hold.”
Most commenters seemed to be in agreement with Hammer, but a few were more sympathetic, saying life can be unpredictable.
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“Parents don’t want to live with their kids,” one said. “The kids HAVE to become the adults.”
Retirement savings
Around 58.1% of baby boomers do not own a retirement account, according to census data from 2020, while 56.1% of Gen X are in the same boat, even as the oldest members of this cohort near retirement.
The situation isn’t much better for those who put money in the bank. According to a survey published in July from the non-profit Transamerica Center for Retirement Studies, the median savings among baby boomers in their retirement accounts is just $289,000, while the median savings is $82,000 among Gen X. That’s simply not enough to live on during a decades-long retirement.
In many cases, younger workers have stepped in to help. Nearly 4.3 million U.S. adults provided financial assistance to their parents in 2020, according to the Census Bureau, spending around $17.5 billion total.
The pressure can be intensified if these parent-supporting adults also have kids of their own.
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What can parents do?
There are a number of things older Americans with little retirement savings can do right away to give their nest egg a boost, including cutting back on their budget, re-entering the labor market or utilizing tax incentives such as Saver’s Credit and catch-up contributions.
Older Americans may also want to consider downsizing their home to unlock some equity from their primary residence. The median U.S. home price in the second quarter was $416,000, according to the St. Louis Fed, which means an elderly couple could significantly boost their retirement savings by moving to a smaller unit or even to another less-expensive city.
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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.
