A TD Canada survey in January, 2017 found that 62% of Canadian Baby Boomers couldn’t save enough for retirement because they were still supporting adult children. But is it possible to put a dollar value on what that support is costing?
A new US study shows that support of adult children could cost their parents over $200,000 that could have gone toward the parents’ retirement.
The data is based on a study, conducted by Harris Poll on behalf of NerdWallet. The study found that 80% of parents of adult children were still covering, or had covered, some of those children’s expenses after they turned 18.
The study went on to calculate the impact on the parents’ own retirement savings, and concluded that it could be as high as $227,000.
A big chunk of that was accounted for by college tuition. More than a quarter of parents of children 18 or older were covering college tuition or student loans, with an average exposure of $21,000. Considering that average loan payoffs take 10 years, this could represent a hit of up to $80,000 in retirement savings.
Parents were also covering all or part of their children’s expenses for clothing (32%), entertainment (20%), and car loans (10%). Also, 10% were providing their adult children with an allowance.
You can get more details on the study here.
It’s true that costs and spending patterns — particularly for post-secondary education — are different in the USA, compared to Canada, but the study reinforces the broad trends already observed in the Canadian market. There are some important implications for marketers:
That's how many Zoomers have an office in their home that's related to their own separate business (not to their employment). Zoomers account for over 60% of all Canadians who have a home office for their own business. Source: Vividata Winter 2019