According to a new study published by Merrill Lynch, more and more parents are helping out their adult kids with everything from housing to grocery expenses. Of the parents surveyed, 79 percent said they provide some type of financial support to their adult children.
“We estimate that parents of adult children annually spend $500 billion on them—twice what they contribute to their own retirement accounts,” said the study’s authors, who analyzed the responses from over 2,500 parents over the age of 18 in June.
While they noted that a lot of that contribution occurs during the college years (and goes toward tuition), they also found that financial aid doesn’t stop after graduation. Some of the most common categories that parents are spending money on for their adult children are groceries and food, cell phone service and car expenses. However, 44 percent also admitted to contributing to vacation costs for their kids.
Additionally, researchers discovered that 31 percent of young adults aged 18-34 years old live with their parents. That statistic is not only 50 percent higher than it was in 1960, but it’s also higher than the number of adults who live with a spouse. And about a quarter of parents put money towards their child’s first home purchase.
Parents are also willing to take money out of their own savings or even live a less comfortable lifestyle if it means helping their kids, with 82 percent of those surveyed saying they would make a major financial sacrifice. But experts warn parents to set clear boundaries and to keep an eye on expenses. “The bottom line is that these financial contributions add up, and many parents aren’t aware of how much they’re spending on their adult children,” the authors say.