As a parent, it’s your job to support your children on the path to adulthood. But plenty of parents continue to support their children financially once they’re adults with kids of their own.
That’s the finding of a 2017 2,000-person survey by TD Ameritrade. On average, millennial parents ages 19 to 37 said they received $11,011 in financial support and unpaid labor from their boomer parents, ages 50 to 70. Without that help, many millennials couldn’t support their current lifestyles, the survey found.
Unfortunately, grandparents are often making sacrifices to aid their children and grandchildren.
Click through to see how boomers are losing money to their millennial children — and what it might cost the older generation in the long run.
Boomers Are Providing Child Care and Household Help
Millennials report that the bulk of support they received in the past year — $8,684 — came in the form of unpaid labor. More than half of those surveyed said they got help from their parents with child care or running the household.
On average, boomer grandparents provided 14.3 hours of primary child care per week and 9.2 hours of back-up care or babysitting. Millennials also said their parents spend more than 10 hours a week helping them prepare meals, clean the house and run errands — all ways to save money, but they take time.
How This Happens
A quarter of the millennials surveyed said they couldn’t afford their current lifestyles if their parents weren’t donating time or labor.
This commitment could affect a boomer’s ability to save for retirement or actually retire. If you’re helping out your children, decide what trade-offs you’re willing to make so you can secure your retirement while still providing support, said David Lynch, managing director and head of branches for TD Ameritrade.
“Keep in mind there could also be financial implications of providing child care if it means a grandparent is leaving or scaling back on their paid work,” said David Lynch, managing director and head of branches for TD Ameritrade.
Boomers Are Helping Kids Pay the Bills
Nearly half of millennials said their parents helped them financially in the past year and gave them $2,543 on average, according to the survey. But they might be getting more support than they realize — or want to admit. See the financial gap between the boomer and millennial generations.
How This Happens
Grandparents said they provided their children with $4,527, on average, in the past year. Here are some of the bill payment estimates provided by millennials and boomers respectively:
Rent/mortgage: The biggest bill boomers helped pay was the mortgage or rent. The 15 percent of millennials who got help with housing reported receiving $2,033, on average. Boomers reported providing $3,462 in support, though.
Car payments: The survey found that 14 percent of millennials said they got help making car payments and received, on average, $787. Parents said they gave their adult children $2,239, on average, for car payments in the past year.
Groceries: Almost a quarter of millennials said their parents help them pay for groceries ($423, on average). Boomers said they gave their kids $898, on average, last year.
Utilities: Fifteen percent of millennials received support from their parents for utility bills and got $408, on average. Parents said they gave their children $607, however.
Cellphone: Almost 20 percent of millennials said their parents help them pay their phone bills. On average, they said they received $262. Parents, though, reported giving their children twice as much — $547, on average.
Boomers Are Helping Kids Pay Their Debts
Boomer grandparents aren’t just helping their millennial children with day-to-day expenses. They’re also helping them pay down debt.
The survey found that 12 percent of millennials said they got help making student loan payments last year. On average, they claimed to receive $625 from their parents. But boomers who said they provided their kids with support for student loan payments reported giving $3,758.
Millennials who got help paying credit card bills reported receiving $600, on average, in the past year. Parents reported giving their millennial children $2,051 for credit card bills, however.
Learn More: The Best Ways to Pay Off Every Kind of Debt
Why This Is a Problem
Unfortunately, many boomers are trying to pay off their own debt simultaneously. A survey by GOBankingRates found that boomers ages 55 to 64 have the second-highest percentage of respondents with credit card debt at 54 percent.
And 27 percent of the parents surveyed by TD Ameritrade said they used some or all of their savings to support their adult children or grandchildren. In some cases, boomers had to postpone their own retirement to help out their kids.
Boomers Are Helping Kids Pay for Entertainment
Not only are parents helping their adult children pay for necessary expenses, but they’re also providing support for non-essential items. For example, 30 percent of millennials said their parents helped them pay for meals out and entertainment in the past year. Those who received support said they got $235, on average. Parents, however, reported giving their millennial children $632 for these purchases.
Boomers are also helping their adult children take vacations. Millennials who received support from their parents to take trips said they got $665, on average. Parents reported giving their children almost twice that much, though — $1,120.
Why This Is a Problem
The survey further found that 40 percent of grandparents support their kids and grandchildren because they want them to have a better life than they otherwise would be able to afford. The problem is that 22 percent had to cut back on meals out and entertainment for themselves to support their children. And 15 percent reported getting to spend less time enjoying life as a result of their generosity.
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Boomers Are Buying Toys and Clothing for Grandkids
It likely comes as no surprise that grandparents are buying toys for their grandkids. More than half of the millennials said their parents helped them buy toys and gave them $172, on average, over the past year. Grandparents, however, reported giving their millennial children $340 for toys.
Along with providing support for toy purchases, boomers often buy clothing for their grandkids. The 47 percent of millennials who said they received support to buy clothing reported getting $189, on average. Yet, grandparents said they gave $428. And 42 percent of boomers said they gave cash gifts to their grandkids — $371 a year on average.
Why This Is a Problem
Unfortunately, some boomers gave money they didn’t have. Boomers have had to sell their possessions, take on extra jobs and find ways to make more money to support their adult children and grandchildren, the survey found.
Boomers Are Helping Pay for Grandkids’ Schooling
The biggest way boomers are helping their grandchildren financially is by contributing to their college savings. That might be okay if they have the cash to spare. Unfortunately, some boomers are sacrificing their own retirement saving efforts to support their grandchildren’s educational endeavors.
How This Happens
Grandparents who provided this type of support over the past year reported giving $2,337. Millennial parents, however, estimated that they received only $1,134 for their kids’ college funds.
Boomers are also helping with their grandchildren’s current school expenses. Millennial parents who received support for private school tuition said they got $750, on average, over the past year. And 21 percent said they got help paying for school expenses such as supplies and outings — $236 on average. Grandparents reported providing $477.
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Boomers Help With Unexpected Expenses
About 20 percent of boomers help pay for unexpected expenses for their grandchildren, according to the survey. And it’s not surprising that millennials need help covering these emergency costs. A GOBankingRates savings survey found that Americans between 18 and 34 are more likely than other generations to have nothing saved.
Why This Is a Problem
Unfortunately, baby boomers aren’t much better off when it comes to having a rainy day fund. The GOBankingRates survey found that 69 percent of adults ages 55 to 64 have less than $1,000 in a savings account. Having an emergency fund should be a priority for boomers, however.
“Grandparents will be more likely to stay on track for retirement by setting aside an emergency fund to cover unexpected expenses and developing a clear financial plan that can help protect and potentially grow their nest egg,” Lynch said.
Boomers Are Happy to Help Despite Financial Strain
Lynch said the TD Ameritrade research shows the majority of grandparents don’t view the financial support they give their children and grandchildren as a burden. While more than half find the combination of saving for retirement and supporting adult children to be stressful, they still put family first, he said.
If boomers value helping their kids, though, they need to have a plan so their finances don’t take a hit. Boomers could set a retirement savings goal by using an online calculator to figure out how much they need to save to retire comfortably. Then they’ll have a better idea of how much financial support they can give their adult children.
“It’s all about setting limits and having an open dialogue with your adult child,” Lynch said. “Work together to set clear limits and expectations for both financial support and childcare.”
How to Solve the Problem
For boomers who are behind on saving because they’ve been supporting their kids, there are several options. To start, they should consider working longer, Lynch said.
“Staying in the job market even a few extra years can make a big difference in terms of additional savings and investing,” he said. “It will also reduce the time that investors’ nest eggs need to stretch in retirement.”
If you’re 50 or older, you can take advantage of catch-up contributions to a retirement account. You can contribute an extra $6,000 to a 401k in 2018. And you can contribute an extra $1,000 to an IRA.
You can also downsize to a smaller, less-expensive home to free up cash. And you can boost your Social Security payout by waiting until after you reach your full retirement age to claim your benefits. A bigger Social Security benefit could help your nest egg last longer, Lynch said.
The key is to take the time to develop a plan. Then boomers won’t have to turn to their children for support one day.