Mar 12, 2026
There’s a silent drain on older Americans’ finances that even experienced financial advisers might miss.
Retirement planners and professional advisors are usually aware of the biggest costs in retirement, from housing to healthcare. But they often overlook the fact that the financial struggles of adult children might spill over into their elderly parents' finances.
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According to the 2025 Protected Retirement Income and Planning (PRIP) study, nearly one in six (17%) seniors are financially supporting their children over the age of 26 (1). Roughly one in ten are providing financial assistance to their grandchildren.
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That’s not the end of the list. A small minority (7%) still provide financial assistance to their parents or in-laws and 9% are supporting other family members or loved ones.
If you’re part of any of these statistics, this invisible drain on your finances could either derail your retirement plan or squeeze your lifestyle. Here’s why becoming an informal bank for loved ones carries a real cost and how you can deal with it before it’s too late.
The real cost of financial support
Faced with a severe affordability crisis and lackluster job market, it’s becoming increasingly common for young adults to turn to their parents for financial support.
The trend has been escalating since 2022, according to a report by Savings.com, and by 2025 roughly 50% of parents were offering at least some form of financial assistance to their adult children (2). On average, these parents were paying $1,474 per month in the form of direct support.
Not only is this a massive and recurring cost, it’s also heavily emotionally charged. Saying no to a loved one, especially if they’re genuinely struggling economically, is difficult for most parents. Setting boundaries is often complicated and could impact the relationship.
This could be why many seniors pull other levers to make this assistance possible. Only 15% of parents surveyed for the PRIP study said they would consider cutting off financial assistance to loved ones (1). Meanwhile, a whopping 58% of them said they would rather consider a lower standard of living.
Another 54% said they were willing to return to work, either part-time or full-time, to plug the gap in their budget, while 39% said they would consider abandoning a personal hobby.
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These uncomfortable choices could be the result of a lack of planning. However, it’s difficult to plan for how much support your family members might need in retirement. If you’re in your 30s or 40s, you may have considered the risks of inflation and healthcare costs, but it’s nearly impossible to predict if your child might need help paying the rent occasionally.
Fortunately, there are ways to mitigate this invisible and unpredictable cost.
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How to deal with it
Parents might struggle to balance their own needs with that of their adult children. But it’s important to appreciate the difference in time horizons.
If you’re in your 50s or 60s, you probably only have a handful of years left to save, invest and expand your wealth. Your adult children may have much more time to boost their careers and portfolios. With that in mind, it’s important to prioritize your own finances over those of your loved ones.
Financial expert Ramit Sethi recommends creating a personal policy for financial support, loans and gifts (3). For instance, you could set a dollar limit on gifts or a time limit on loans before offering them to your loved ones.
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It’s also important to set clear boundaries. Don’t offer money you can’t afford. Explain clearly why your boundaries exist as well as any consequences for breaching these personal financial boundaries. Modifying these boundaries when your personal financial situation changes is also essential.
“Clear boundaries create freedom, not restriction,” Sethi says on his website. “They allow you to say yes to the right things and no to everything else.”
Ultimately, generosity toward family can be admirable, but protecting your own retirement security must come first, because if your savings run out, there may be no one left to support you.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
LIMRA (1); Savings.com (2); I Will Teach You to Be Rich (3)
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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.
