Retirement Savings Being Drained by Adult Kids Living at Home

Adult children find financial support from retirement savings of their parents

 As parents embark on the empty-nest stage of life or begin to enjoy their retirement savings , they’re finding a surprise in their spare bedrooms: their adult kids.  

When the pandemic hit and we all had to hunker down and stay put, many families moved in together to ride it out: 52% of young adults age 18-24 years old moved back in with their parents, according to data from the Pew Research Center.  

But more than two years later, 40% of parents still have an adult child in their home, and in many cases, they are financially supporting them, as young adults face the financial hurdles of student loans, rising rents, and across-the-board inflation.

The number of young adults living with their parents has risen to levels not seen since the Great Depression.

While this may, or may not, be a good thing for American family relationships, it is definitely not helping parents’ financial security and savings. Forty-three percent of parents say they have sacrificed their own financial security for the sake of their children, and this sacrifice is affecting how they feel about their own financial futures. 

Working parents providing financial support to their adult children are spending, on average, 23% more each month on their adult child – an average of $605 – than on their own retirement or savings contributions. And, they are spending that money even if they’re near retirement and can’t easily replace it. 

In fact, nearly one-third of parents who are already retired are financially supporting an adult child. A quarter of parents say they’d pull money from their retirement accounts and 22% say they’d delay their retirement in order to provide support if their adult children needed it. 

The surveys are in 

Pew’s research is supported by other surveys as well. For example, a survey by Thrivent, found that 35% of parents with adult children at home have compromised their retirement savings to help their children financially.   

Separate research from found that 50% of parents give their adult children $1,000 a month in financial support, and 25% are willing to dip into their savings and retirement to cover the expense. 

While not focused on parents with adult children living at home, U.S. News & World Report’s “Retirement and Inflation” survey published January 9, 2023, surveyed 2,000 U.S. people who have been saving for retirement for more than five years. That survey found that 32% have pulled money out of their retirement funds to meet daily living costs. In addition to facing possible tax bills from cashing in assets with gains, such savers also reduced the ability of their investments to appreciate. 

What they pay for 

Members of Generation Z, those born between 1995 and 2012, account for the majority of adult children receiving financial support, at 65%. The second-most supported group are the Millennials (born 1980 – 1994) at 32%. And, nearly 20% of adult children who receive financial support from their parents are over 30 years old.   

The Pew report found that 48% of parents who are financially supporting their adult children pay for their kids’ cell phone plan, car payments, or other monthly bills. Nearly a quarter also said they provide their adult children with a regular allowance, pay some or all of their rent, or have them as an authorized user on their credit card.  

On average, parents who financially support their adult children give them $1,000 per month for expenses like food, health insurance, rent, cell phones, tuition, and travel. 

Lack of financial communication 

The typical 25- to 34-year-old living at home contributes 22% of the total household income, Pew found. But, 62% of adult children don’t contribute at all to the household expenses. 

A majority, 72%, of kids who moved home believe their parents have the means to financially support them. However, just 21% of parents agree. The disconnect may come from the fact that, according to the Thrivent report, 70% of parents have not discussed money management or asked their children to chip in while living at home with them.  

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation. 



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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