Supporting Adult Kids, Aging Parents Costs American Family Budgets $630 Billion a Year
One Fifth of Americans Are Financial Supporters to One or More Family Members
TD Ameritrade Survey Also Shows Inter-Generational Envy
Although Americans surveyed say providing monetary support to a family member is not a financial struggle, many also maintain high debt levels and have delayed major life milestones to provide this financial assistance. TD Ameritrade’s 2015 Financial Support survey explores the struggle Americans feel towards helping a family member in need while still in debt themselves, and reveals key differences between Generation X and Baby Boomers.1
The Real Cost of Financial Support
-One in five Americans (22 percent) provide financial support to a parent and/or an adult child (“Financial Supporters”).
-Over the past year, Financial Supporters have given $12,000 of support on average – that’s an estimated $630 billion from the US economy.2
Few report that providing this support is causing them great financial hardship: only 22 percent say they needed to use their savings to provide financial help while 30 percent made small sacrifices and lived more frugally.
However, Financial Supporters also hold almost $100,000 in debt on average: $22,000 in unpaid credit card balances, personal lines of credit, or personal or student loans, and $75,000 in mortgage debt.
Generational Differences and Emotions Play a Role
-Half of Generation X (49 percent) think they have more financial responsibilities than their parents’ generation and 39 percent feel their generation will never have as secure a financial life as their parents’ generation.
-Financial Supporters say they are glad to be able to help the family member they support (64 percent are very glad to help a parent and 53 percent report the same about a child) and would sacrifice more if needed, while a third (36 percent) would delay their retirement to financially support their adult children.
-But, if forced to choose, 83 percent of Financial Supporters would support an aging parent over an adult child.
-Financial supporters are almost twice as likely to be supporting a mother (42 percent) than a father (23 percent) and mothers receive $5,000 more support.
-Most (69 percent) Financial Supporters who support their adult children will do so until their children find well-paying jobs.
Tough Conversations Can Lead to Financial Solutions
-Conversations about financial support most often happen when the family member asks for help (44 percent discussing with parents, 52 percent discussing with children).
-The majority (79 percent) have not discussed financial support of others with a financial professional, and only half (49 percent) have discussed it with the person whom they support.
-The top conversation topics between Financial Supporters and whom they support are money management (54 percent) and reducing the need for support (50 percent).
“The financial downside of living longer may mean not only planning for our own extended retirement years, but also caring for aging family members in ways that can take a solid bite out of any well-laid plans,” said Matthew Sadowsky, director of retirement at TD Ameritrade, Inc., a broker-dealer subsidiary of TD Ameritrade Holding Corporation. “And even beyond the financial implications, this could have an impact on family dynamics. With older generations it can be an especially difficult conversation to have. But, it’s better to have the discussion and do some detective work now – as well as some planning – than get hit with a daunting financial reality later.”
1: Generations are defined according to the Pew Research Center. Millennials (between ages 18 to 34 in 2015), Generation X (ages 35 to 50 in 2015) and Baby Boomers (ages 51 to 69 in 2015). http://www.pewresearch.org/fact-tank/2015/01/16/this-year-millennials-will-overtake-baby-boomers/
2: $630 billion loss estimated as follows: On average, a survey respondent who has financially supported either an adult child or aging parent in the past year has spent $12,000. One fifth (22 percent) of survey respondents (or 52,500,000 Financially Supportive Americans out of a possible 240 million U.S. adults3) spent this amount of money in the past year, translating to a National loss of $630 billion.
3: US Census Bureau, US adult population of 240 million, 2013 estimate. http://quickfacts.census.gov/qfd/states/00000.html
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how – bringing Wall Street to Main Street for 40 years. An official sponsor of the 2014 and 2016 U.S. Olympic and Paralympic Teams, as well as an official sponsor of the National Football League for the 2014, 2015 and 2016 seasons, TD Ameritrade has time and again been recognized as a leaderin investment services. Please visit TD Ameritrade’s newsroom or www.amtd.com for more information, or read our stories at Fresh Accounts.
Source: TD Ameritrade Holding Corporation For more on the study, please visit http://www.amtd.com/files/doc_downloads/research/TDA-Financial-Support-Study-2015.pdf
About Head Research
Head Research is a division of Head Solutions Group (U.S.) Inc., a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Research are separate and unaffiliated firms and are not responsible for each other’s services or policies.
About the 2015 Financial Support Survey
An online survey was conducted with 1,000 U.S.-based adults aged 18 or above by Head Research, between June 24 and July 6, 2015, on behalf of TD Ameritrade Holding Corporation. Sample was drawn from major regions in proportion to the U.S. census. The statistical margin of error for the total sample of N=1,000 adults within the target group is +/- 3.1% (assuming that participants are the same as non-participants). This means that, in 19 out of 20 cases, survey results will differ by no more than 3.1 percentage points in either direction from what would have been obtained from the opinions of all target group members in the U.S.