It’s not uncommon to hear of parents helping out children when it comes to financial support, but what is less common is hearing of children helping parents – or is it? A new study from TD Ameritrade details some numbers that most will find shocking.
The Numbers Don’t Lie
According to the aforementioned report, 22% of Americans currently provide financial support to other family members. Many of these supporters are young adults that are helping financially struggling parents – despite the fact that most young adults are in debt themselves. Roughly $12,000 in financial support has been handed out to family members over the past 12 months – that’s nearly $630 billion dollars!
It may seem like those family members helping other family members must have the funds to do so, but often this is not the case. In fact, most financial supporters already have nearly $100,000 in debt (mostly credit card and mortgage debt). So how can a family member that doesn’t have any extra funds help support another family member? Study participants noted that they often cut back on extra expenses, and some use savings account dollars to help family members in need, very likely cutting into their own retirement income.
Interestingly, the study also notes that most people helping family members do not mind doing so.
Who’s Getting the Support?
As it turns out, most financial support goes directly to parents with mothers getting more money from children than fathers. The numbers state that mothers receive around $5000 more in support funds than fathers do. Why are so many parents in need of financial support? It’s hard to pinpoint the exact cause, but one reason might be that people are living longer today than ever before.
Because people are living longer, they need to save more money before they retire. Retirement dollars that once stretched well into a person’s golden age are no longer sufficient. This often results in parents asking children for financial help. With this in mind, children today now have to plan not only for their own retirement, but for the financial support that may be needed by parents with dwindling bank accounts in the future.
Without proper financial planning now, your debt load may be too heavy to manage in the future. It is becoming more and more essential that you plan well in advance and account for things like supporting a parent or two that may need your help down the road.