A recent study from Savings.com found that nearly half of American parents (47%) are providing financial assistance to their adult children, emphasizing economic challenges faced by younger generations. According to the study, rising costs of living, including increased expenses for food and housing, have led many young adults to rely on parental support for their day-to-day expenses.
The study reveals that parents are allocating approximately 2.4 times more funds to support their adult children than they are investing in their own retirement accounts.
On average, these adult children are around 22 years old. Despite the expectation that adult children should become financially independent by age 25, the reality is that many continue to rely on parental support well beyond that age.
Approximately 21% of parents are assisting millennials and members of Generation X with monthly financial support ranging between $907 and $960.
For Generation Z adults, aged 18-27, the average monthly support is even higher at about $1,515, particularly for covering college-related expenses.
Across all age groups, parents are shouldering the financial burden for essentials such as groceries, rent, mortgage payments, tuition, and health insurance. However, as living costs continue to rise, more adults are either opting or being compelled to reside with their parents.
A recent Harris poll found that 61% of American renters across all age brackets express concerns about their prospects of ever owning a home due to the escalating costs associated with homeownership. Younger generations face additional financial hurdles, including higher levels of student loan debt and lower wages, further exacerbating their financial predicaments.