Amid inflation, half of parents financially support adult children

To keep up with rising costs, many young adults turn to a likely safety net: their parents.

From buying groceries to paying for their cell phone plan or covering health and auto insurance, 45% of parents with a child over age 18 provide them with at least some financial support, according to a recent report by Savings.com.

On average, these parents are spending more than $1,400 a month helping their adult children make ends meet, the report found.

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In the last year, inflation has posed a challenge for those trying to achieve financial independence. Soaring food and housing costs are just some of the significant hurdles for young adults just starting out.

For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is at risk. 

And parents nearing retirement contribute the most to their children — to the tune of about $2,100 a month, on average, while only putting $643 a month into their retirement accounts, Savings.com found. 

Overall, America’s retirement preparedness has declined as the economy has faltered, Fidelity’s 2023 Retirement Savings Assessment also found. Now, only 78% of savers have the income they need to cover estimated expenses during retirement.

With their retirement security in jeopardy, nearly half, or 48%, of retired Americans believe they’ll outlive their savings, according to a separate report by Clever Real Estate.

“Everybody is everyone else’s lifeboat when it comes to hitting an iceberg,” said Laurence Kotlikoff, economics professor at Boston University and president of MaxiFi, which works to analyze your spending, saving and insurance to make sure they match your lifestyle and level of wealth.