The Real Cost of Funding Adult Children: Postponing Retirement

Report shows that nearly one-third of American parents support their adult children financially and the majority of them think it's hurting them financially.

An older man walking with his adult son outdoors.
(Image credit: Getty Images)

We love our kids. But when is supporting them financially a good thing and when is it, well, not so good? According to a new study from Intuit Credit Karma, almost 32% of parents with kids over 18 provide financial support. They may allow children to live at home (64%), pay some or most of their monthly bills (49%), pay some or all of their kid’s rent and provide regular allowances (23%). 

The survey highlights that 76% of parents who financially support their adult children report a negative impact on their own finances, and another 60% say the support causes mental stress. And while many surveyed parents make sacrifices in order to support their grown children, including 52% cutting back on living expenses, 27% postponing retirement and 39% struggling to afford basic necessities like bills and groceries, some question if there is an expiration date on helping kids financially. 

Should parents pay for their adult children?

Reasons why parents pay for their adult children vary, but according to the study, some parents may help their grown children out of a sense of obligation (50%), while others attest to the high cost of living (42%), an unfriendly job market or because their children cannot find enough work (33%), and rising rent prices (23%). 

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“Achieving financial independence as a young adult can be challenging, especially as they face high housing and education costs,” said Courtney Alev, consumer financial advocate at Credit Karma. “There’s nothing wrong with providing financial support to your adult children, but if it begins to have a negative impact on your own finances, it is probably time to set some guardrails.”

As a parent, it's important to also understand your limits. Make sure you can afford to help your kids financially and that doing so won’t break the bank or set you up for financial hardship in the future. Set boundaries and be willing to say no. 

“In addition to clearly communicating any expectations tied to the financial assistance you’re providing, make sure you’re assessing your own financial situation to ensure you’re not negatively impacting your financial goals, such as pulling from your retirement savings.” 

Having healthy boundaries can teach children self-control and give them a sense of self-esteem. Besides, providing financial support without setting limits could keep your adult child from becoming financially independent later on.

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Kathryn Pomroy

For the past 18+ years, Kathryn has highlighted the humanity in personal finance by shaping stories that identify the opportunities and obstacles in managing a person's finances. All the same, she’ll jump on other equally important topics if needed. Kathryn graduated with a degree in Journalism and lives in Duluth, Minnesota. She joined Kiplinger in 2023 as a contributor.