Millennials and Financial Dependence
As a parent, one of the biggest responsibilities is making sure your children are taken care of – fed, clothed etc. The most recent available information says that the average cost of raising a child from birth to age 17 is $233,610 in a married two-parent middle income family with two children. As the old saying goes, “It ain’t cheap!”.
But that’s just to age 17. There seems to be a trend where millennials are staying home for longer and depending on mom and dad’s financial support. A new Bankrate survey on financial independence reveals an alarming trend: 50 percent of Americans say they have sacrificed or are sacrificing their own retirement savings in order to help their adult children financially.
According to the study, the traditional view of becoming an adult at 18 was common among those surveyed, especially when it comes to regular expenses. Car payments and insurance, cell phone bills, subscription services, travel costs and credit card bills all had the majority of respondents saying that individuals between 18 to 19 years old should be paying for these bills themselves.
As the bill gets more expensive, however, the average age expectation starts to increase and vary by generation. Overall, respondents said individuals aged 23 should begin paying down their own student loans – and that isn’t peculiar to high income homes either.
Housing costs also had a higher average age overall, at 21 years old. Gen Z and Millennials agreed the average age to start paying rent or a mortgage was 22, whereas Boomers, Gen X and the Silent Generation all said 21.
The highest age of them all? It’s for paying health insurance. Overall, respondents reported 23 as the average age individuals should start paying for their own premiums. Millennials, Gen X and Boomers all said that number should be 23; Gen Z pushed to 24. The Silent Generation said 22.
The most alarming item of the survey isn’t that parents are helping their adult children — it’s that most of them say that supporting their kids is hurting their own financial futures. 50 percent of respondents say they have sacrificed or are sacrificing their own retirement savings in order to help their adult children financially. Half of Gen X and Boomer respondents said the same.
This trend is doubly concerning when you take into account that working Americans are struggling to save money for both their short-term and long-term goals: More than one in five don’t save any of their annual income.
And those who do save, aren’t setting aside a lot: 20 percent save only 5 percent or less of what they make, and 28 percent save 6 to 10 percent. Just 16 percent are saving more than 15 percent of their income.
Experts generally recommend earmarking 10 to 20 percent of your income just for retirement savings.
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