Some parents spend more than $500 a month to cover their adult kids' rent, groceries and other bills
TORONTO, Sept. 2, 2015 /CNW/ - Adult children (non-students, 18 years and older) who continue to rely financially on their parents are putting a drain on the nest eggs of two-thirds (66 per cent) of parents who are feeling the impact of these extra costs, finds the latest poll by CIBC (TSX: CM) (NYSE: CM).
The poll found that about one in four parents are spending more than $500 a month to help their adult children cover expenses such as rent, groceries and cell phone bills and some parents say paying these bills is cutting into their personal savings and causing them to delay retirement, as well as their ability to travel and spend money on themselves.
"Parents may have the will to help their adult kids but they may not always have the means," says Christina Kramer, Executive Vice President of Retail and Business Banking at CIBC. "Having a serious talk about money with your grown child can be a sensitive topic - an independent financial advisor can help facilitate that conversation to assess how much help parents can reasonably provide."
Highlights of the poll include:
- Two-thirds (66 per cent) of parents say they have felt the financial impact of supporting their adult children while 34 per cent said they felt no impact
- Among those parents who say they are being affected financially by supporting their adult children, 47 per cent say it has hampered their ability to save for themselves and 20 per cent say they have delayed retirement
- About one in four (23 per cent) parents who support their adult children spends more than $500 a month while most spend between $100 and $499
National data suggests that parents are increasingly supporting their adult children. For example, the most current census by Statistics Canada from 2011 found that 42 per cent of 4.3 million young adults (aged 20-29) lived at home, compared to 32 per cent in 1991 and 27 per cent in 1981.
Where the money goes
The most common form of financial support that parents provide their adult kids is free room and board at home (71 per cent) but many contribute towards other bills as well, including:
- 47 per cent - groceries/other household expenses
- 35 per cent - cell phone bills
- 23 per cent - car payments or vehicle related expenses
- 17 per cent - rent for their adult kids to live elsewhere
- 12 per cent - debt repayments
"Living at home temporarily can be a smart way for young adults to save for the future or pay down student loans, and we know that many parents want to help out their adult kids," Ms. Kramer says. "These extra costs can be a burden that delays or prevents parents from meeting financial goals such as retirement, and that's why both parents and kids need to be mindful of their budgets."
KEY POLL FINDINGS
How parents say financially supporting their adult children affects them:
|Cut into personal savings||47%|
|Impacted ability to travel/spend on myself||44%|
|Delayed age of retirement||20%|
|Delayed selling or downsizing your home||14%|
|Financially supporting my adult child(ren) has not impacted my lifestyle, future plans or current financial position||34%|
How parents are financially assisting their adult children:
|Free room & board in my home||71%|
|Help out with groceries/household expenses||47%|
|Pay cell phone bills (voice & data plans)||35%|
|Car payments or vehicle-related expenses (full or partial contribution)||23%|
|Rent (full or partial contribution)||17%|
|Contribution toward a down payment for home purchase||5%|
Amount of financial support or assistance parents provide to their adult children, per month:
|Less than $100||10%|
|$100 - $249||24%|
|$250 - $499||31%|
|$500 - $999||16%|
|$1,000 or more||7%|
|I don't know||11%|
From August 7 to 11, 2015, an online survey was conducted among 1,054 randomly selected Canadian parents that are financially supporting adult children (non-students, age 18) who are Angus Reid Forum panelists. The margin of error - which measures sampling variability - is +/- 3.02 per cent, 19 times out of 20. Discrepancies in or between totals are due to rounding.
CIBC is a leading Canadian-based global financial institution with nearly 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.
Caroline Van Hasselt, Director, External Communications, 416-784-6699 or [email protected]