US Parents Spend Billions on Adult Children - Report

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Millions of American parents could be putting their plans for a comfortable retirement at risk by continuing to act as the family bank for their adult children.

"Parenting is a lifelong financial commitment," Surya Kolluri, a managing director at Bank of America Merrill Lynch, told VOA via email. "Parents spend twice as much on adult children as they contribute to their retirement accounts."

More than three-fourths — 79 percent — of parents with adult children provide financial assistance to their offspring, contributing to living expenses like rent, groceries and cellphone bills, according to a recent study from Merrill Lynch.


In many cases, that parental generosity threatens to worsen a looming retirement crisis, according to labor economist and retirement expert Teresa Ghilarducci, who says 40 percent of middle-class people now approaching retirement will be poor or near poor by the time they're 62.

"All Americans at every level of income will have some trouble preparing for the retirement especially if their lives are long and their health care needs are substantial," Ghilarducci said via email. "But people at the bottom 90 percent of the income distribution are going to find that the rely on Social Security for most of their income and that won’t be enough."

The study found U.S. parents spend a total $500 billion on adult children annually.

And that doesn't even include the sizable checks parents write to cover one-time, big-ticket expenses like weddings and home purchases. About 6 in 10 parents help pay for their adult children’s weddings, and one-fourth help a child buy their first home.