By Cameron Huddleston
WWR Article Summary (tl;dr) As David Lynch, managing director and head of branches for TD Ameritrade says, “Faced with record-high student debt, stagnant wages and rising childcare costs, millennial parents are facing the growing bundle that their bundles of joy cost.”
As a parent, it’s your job to support your children on the path to adulthood. But plenty of parents continue to support their children financially even after they’re adults with kids of their own.
That’s the finding of a new 2,000-person survey by TD Ameritrade. On average, millennial parents ages 19 to 37 said they received $11,011 in annual financial support and unpaid labor from their boomer parents, ages 50 to 70. Without that help, many millennials couldn’t support their current lifestyles, the survey found.
“Faced with record-high student debt, stagnant wages and rising childcare costs, millennial parents are facing the growing bundle that their bundles of joy cost,” said David Lynch, managing director and head of branches for TD Ameritrade.
“Grandparents are the secret to making it work, eager to help with financial support, child care and running the household.”
However, half of the grandparents surveyed said they’ve made sacrifices to help their children and grandchildren. Here’s a breakdown of what baby boomers are spending on their millennial children, and how it’s affecting them financially.
BOOMERS ARE PROVIDING CHILD CARE AND HOUSEHOLD HELP
Millennials report that the bulk of support they received in the past year, $8,684, came in the form of unpaid labor.
More than half of those surveyed said they got help from their parents with child care or running the household.
On average, boomer grandparents provided 14.3 hours of primary child care per week and 9.2 hours of back-up care or babysitting. Millennials also said their parents spend more than 10 hours a week helping them prepare meals, clean the house and run errands.
A quarter of the millennials surveyed said they couldn’t afford their current lifestyles if their parents weren’t donating time or labor. However, grandparents need to consider the impact that providing care has on their lifestyles.
“Keep in mind there could also be financial implications of providing child care if it means a grandparent is leaving or scaling back on their paid work,” Lynch said.
This commitment could affect a boomer’s ability to save for retirement or actually retire. If you’re helping out your children, decide what trade-offs you’re willing to make so you can secure your retirement while still providing support, Lynch said.
BOOMERS ARE HELPING KIDS PAY THE BILLS
Nearly half of millennials said their parents helped them financially in the past year and gave them $2,543 on average, according to the survey.
However, they might be getting more support than they realize, or want to admit. That’s because grandparents said they provided their children with $4,527, on average, in the past year.
Here are some of the bill payment estimates provided by millennials and boomers respectively:
Rent/mortgage: The biggest bill boomers helped pay was the mortgage or rent. The 15 percent of millennials who got help with housing reported receiving $2,033, on average. However, boomers reported providing $3,462 in support.
Car payments: The survey found that 14 percent of millennials said they got help making car payments and received, on average, $787. However, parents said they gave their adult children $2,239, on average, for car payments in the past year.
Groceries: Almost a quarter of millennials said their parents help them pay for groceries ($423, on average). Boomers said they gave their kids $898, on average, last year.
Utilities: Fifteen percent of millennials received support from their parents for utility bills and got $408, on average. However, parents said they gave their children $607.
Cellphone: Almost 20 percent of millennials said their parents help them pay their phone bills. On average, they said they received $262. Parents, though, reported giving their children twice as much, $547, on average.
BOOMERS ARE HELPING KIDS PAY THEIR DEBTS
Boomer grandparents aren’t just helping their millennial children with day-to-day expenses. They’re also helping them pay down debt.
The survey found that 12 percent of millennials said they got help making student loan payments last year. On average, they claimed to receive $625 from their parents. However, boomers who said they provided their kids with support for student loan payments said they gave $3,758.
Millennials who got help paying credit card bills reported receiving $600, on average, in the past year. However, parents reported giving their millennial children $2,051 for credit card bills.
What’s worse, many boomers are trying to pay off their own debt simultaneously. A survey by GOBankingRates found that boomers ages 55 to 64 owe a median of $3,000 in credit card debt. And 27 percent of the parents surveyed by TD Ameritrade said they used some or all of their savings to support their adult children or grandchildren. In some cases, boomers had to postpone their own retirement to help out their kids.
BOOMERS ARE HELPING KIDS PAY FOR ENTERTAINMENT
Not only are parents helping their adult children pay for necessary expenses, but they’re also providing support for non-essential items. For example, 30 percent of millennials said their parents helped them pay for meals out and entertainment in the past year. Those who received support said they got $235, on average. Parents, however, reported giving their millennial children $632 for these purchases.
Boomers are also helping their adult children take vacations. Millennials who received support from their parents to take trips said they got $665, on average. Parents reported giving their children almost twice that much, $1,120.
The survey further found that 40 percent of grandparents support their kids and grandchildren because they want them to have a better life than they otherwise would be able to afford. However, 22 percent had to cut back on meals out and entertainment for themselves to support their children. And 15 percent reported getting to spend less time enjoying life as a result of helping their kids.