Supporting Adult Kids, Aging Parents Costs American Family Budgets $630 Billion a Year
August 04 2015 - 8:30AM
Business Wire
One Fifth of Americans Are Financial Supporters
to One or More Family MembersTD Ameritrade Survey Also Shows
Inter-Generational Envy
Although Americans surveyed say providing monetary support to a
family member is not a financial struggle, many also maintain high
debt levels and have delayed major life milestones to provide this
financial assistance. TD Ameritrade’s 2015 Financial Support survey
explores the struggle Americans feel towards helping a family
member in need while still in debt themselves, and reveals key
differences between Generation X and Baby Boomers.1
The Real Cost of Financial Support
- One in five Americans (22 percent)
provide financial support to a parent and/or an adult child
(“Financial Supporters”).
- Over the past year, Financial
Supporters have given $12,000 of support on average – that’s an
estimated $630 billion from the US economy.2
- Few report that providing this support
is causing them great financial hardship: only 22 percent say they
needed to use their savings to provide financial help while 30
percent made small sacrifices and lived more frugally.
- However, Financial Supporters hold
almost $100,000 in debt on average: $22,000 in unpaid credit card
balances, personal lines of credit, or personal or student loans,
and $75,000 in mortgage debt.
Generational Differences and Emotions Play a Role
- Half of Generation X (49 percent) think
they have more financial responsibilities than their parents’
generation and 39 percent feel their generation will never have as
secure a financial life as their parents’ generation.
- Financial Supporters say they are glad
to be able to help the family member they support (64 percent are
very glad to help a parent and 53 percent report the same about a
child) and would sacrifice more if needed, while a third (36
percent) would delay their retirement to financially support their
adult children.
- But, if forced to choose, 83 percent of
Financial Supporters would support an aging parent over an adult
child.
- Financial supporters are almost twice
as likely to be supporting a mother (42 percent) than a father (23
percent) and mothers receive $5,000 more support.
- Most (69 percent) Financial Supporters
who support their adult children will do so until their children
find well-paying jobs.
Tough Conversations Can Lead to Financial Solutions
- Conversations about financial support
most often happen when the family member asks for help (44 percent
discussing with parents, 52 percent discussing with children).
- The majority (79 percent) have not
discussed financial support of others with a financial
professional, and only half (49 percent) have discussed it with the
person whom they support.
- The top conversation topics between
Financial Supporters and whom they support are money management (54
percent) and reducing the need for support (50 percent).
“The financial downside of living longer may mean not only
planning for our own extended retirement years, but also caring for
aging family members in ways that can take a solid bite out of any
well-laid plans,” said Matthew Sadowsky, director of retirement at
TD Ameritrade, Inc., a broker-dealer subsidiary of TD Ameritrade
Holding Corporation. “And even beyond the financial implications,
this could have an impact on family dynamics. With older
generations it can be an especially difficult conversation to have.
But, it’s better to have the discussion and do some detective work
now – as well as some planning – than get hit with a daunting
financial reality later.”
1: Generations are defined according to the Pew Research Center.
Millennials (between ages 18 to 34 in 2015), Generation X (ages 35
to 50 in 2015) and Baby Boomers (ages 51 to 69 in 2015).
http://www.pewresearch.org/fact-tank/2015/01/16/this-year-millennials-will-overtake-baby-boomers/
2: $630 billion loss estimated as follows: On average, a survey
respondent who has financially supported either an adult child or
aging parent in the past year has spent $12,000. One fifth (22
percent) of survey respondents (or 52,500,000 Financially
Supportive Americans out of a possible 240 million U.S. adults3)
spent this amount of money in the past year, translating to a
National loss of $630 billion.
3: US Census Bureau, US adult population of 240 million, 2013
estimate. http://quickfacts.census.gov/qfd/states/00000.html
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Source: TD Ameritrade Holding Corporation
About Head ResearchHead Research is a division of Head
Solutions Group (U.S.) Inc., a leading market research partner for
Financial Services companies in North America. With offices in New
York, Toronto and Montreal, Head delivers the deep customer
insights that increase institutional knowledge and propel business
action. TD Ameritrade and Head Research are separate and
unaffiliated firms and are not responsible for each other’s
services or policies.
About the 2015 Financial Support SurveyAn online survey
was conducted with 1,000 U.S.-based adults aged 18 or above by Head
Research, between June 24 and July 6, 2015, on behalf of TD
Ameritrade Holding Corporation. Sample was drawn from major regions
in proportion to the U.S. census. The statistical margin of error
for the total sample of N=1,000 adults within the target group is
+/- 3.1% (assuming that participants are the same as
non-participants). This means that, in 19 out of 20 cases, survey
results will differ by no more than 3.1 percentage points in either
direction from what would have been obtained from the opinions of
all target group members in the U.S.
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version on businesswire.com: http://www.businesswire.com/news/home/20150804005229/en/
TD Ameritrade Holding CorporationFor Media:Brendan
McManus, 201-369-8541Communications & Public
Affairsbrendan.mcmanus@tdameritrade.comorFor Investors:Jeff Goeser,
402-597-8464Investor Relations &
Financejeffrey.goeser@tdameritrade.com
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