Helping grown-up children financially from time to time is the norm for American parents, according to a new CreditCards.com survey.
Our national poll of 3,583 U.S. adults found that 74 percent of people with children aged 18 and older have helped their adult kids pay living expenses or debts. An extrapolation based on 234.6 million adults living in the U.S. reveals 49 million parents have yet to fully cut the financial umbilical cord from their grown-up offspring.
"Some parents have a hard time letting go, and they continue to over-function for their children for longer than is necessary," said Debbie Pincus, a New York-based psychotherapist and author of "The Calm Parent." "It makes it more difficult for children to get on their feet because they don't have to."
Sixty-two percent of respondents with adult children said they helped their kids pay living expenses, while 52 percent said they chipped in for debt payments. The numbers are even more striking when we look at just the parents who helped their adult children financially - 84 percent pitched in for living expenses, and 70 percent said they relieved debt.
At 39 percent, cellphone bills were the most common item for parental assistance, followed by transportation costs - including car repairs, gasoline and tickets - at 36 percent. At the low end of the spectrum were personal loans (10 percent) and mortgage payments (6 percent).
Other key poll findings
Here's what else our survey found about how parents help their adult children financially:
- It takes two. Married people were significantly more likely than divorcees and never-married parents to help their grown-up children financially.
- Thanks, Dad! Men were significantly more likely than women to help pay their kids' living expenses, including rent. And women were more likely than men to say they've never helped pay their children's bills.
- Older parents are debt saviors. Respondents aged 55 and over were significantly more likely than those aged 35-54 to say they helped their adult children with debt payments. Conversely, parents aged 35-54 were more likely to help adult children with living expenses.
- My kid and my money go to Harvard. Parents in the Northeast were significantly more likely than those in any other region to help their adult kids pay student loans.
- Credit card debt? No way. Only 16 percent of respondents said they helped an adult child pay a credit card bill.
The survey of 3,583 adults was conducted online Nov. 15-19, 2017. See survey methodology.
A post-recession failure to launch
A majority of U.S. adults with grown-up children are still providing for their babies, even though those babies are old enough to have babies of their own. Is it a sign that today's young adults are plagued with inertia, or have gotten so comfortable depending on mom and dad that they'll never fend for themselves?
Paul Golden, spokesman for the National Endowment for Financial Education (NEFE), said many young adults have been slow to emerge from the Great Recession - particularly those who tried to start their careers after the economy cratered.
"The recession was a big thing," he said. "Younger adults were not able to find jobs - or high-paying jobs - and so they were back in with mom and dad."
Although the economy is on stronger footing now, research has shown the financial outlook for today's young adults is less rosy than it was when their parents were first striking out on their own. A January 2017 study by economic policy group Young Invincibles revealed young adult workers today earn $10,000 less than people of the same age in 1989. Millennials have earned a net worth half that of baby boomers, and the latter group owned twice the amount of assets when they were younger as young adults do today.
Digging out of a debt hole
Many of today's young adults are also starting their professional lives under a mountain of student loan debt. Data from the Federal Reserve show U.S. student loan debt reached $1.49 trillion in September . Other Fed research shows the average monthly student loan debt payment for a borrower aged 20-30 was $351 as of 2015 , and the serious delinquency rate for student loans is 11.2 percent .
Our poll shows 20 percent of respondents with adult children helped them pay student loans - the most common response of any single loan type we asked about.
"Parents are seeing their kids take out loans of $100,000 or $200,000, and they feel guilty that they're starting their lives that way," said Nicole Peterkin, a financial planner and author of "If You Love Your Family, Save Like It."
Golden noted that many young adults today also aspire to live and work in large metropolitan areas, where the cost of living tends to be higher. Help with student loan payments may be critical to a young adult being able to afford to live in a big city where an apartment rental costs thousands of dollars per month , particularly if his first job pays less than $50,000 per year .
"If you are in a destination city where things are pretty expensive and there's competition for jobs … it starts to over-tilt the common advice of what we tell people, such as keep your debt capacity at 5 percent [of your income] and your rent or mortgage at 30 percent," Golden said. "It becomes something that's not realistic or reasonable."
"Parents are seeing their kids take out loans of $100,000 or $200,000, and they feel guilty that they're starting their lives that way."
Mom and dad's duty, or extended over-parenting?
The desire to give your children a leg up is only natural, but an overreliance on parental funding can be unhealthy for all parties involved. Experts say too much generosity can hinder an adult child's financial maturation, decimate the parents' savings and create tension among all family members.
"The ramifications are that resentment builds not only in one another, but also siblings," said Bethany Palmer, who is one-half of the financial coaching team The Money Couple along with her husband Scott. "Siblings aren't stupid. They somehow find out that money is being given and all of a sudden they feel like they should be given money, too."
Scott Palmer added that married couples who help their grown children financially also tend to be divided over the issue - one spouse wants to give, and the other favors tough love.
Of course, lending money to an adult child is not always a sign of an unhealthy relationship of dependency. Even young adults who earn respectable salaries and are generally able to provide for themselves need help from time to time.
"All of this depends on the relationship that exists and the child himself," Pincus said. "You might do it for one child because you know there's no harm there - they're on their own feet, they take care of themselves and they make their own money. For others who can't quite get launched, it would be concerning to keep doing that."
If subsidizing your children becomes too much to handle, it's best to establish a time frame for turning off the spigot, and clearly provide notice. The Palmers recommend giving your kids a six-month warning.
"When you're cutting the financial umbilical cord, you can't just say 'Hey, we're stopping now,'" Scott Palmer said. "You have to go through a process of weaning them off your payroll."
Finding middle ground
Providing financial assistance to an adult child doesn't have to create personal strife or be a burden. NEFE's Golden said parents who want to help their children should listen carefully to what kind of assistance the child requests and make an informed decision about how to help.
"Is it just helping them through a rough patch, or are you enabling something that's going to become a repetitive request," he said. "If you look at things like paying off student loan or credit card debt, you don't want to get into the habit of bailing them out every time they get in over their heads."
CreditCards.com commissioned YouGov Plc to conduct interviews with 3,583 adults living in the United States. The survey was conducted online between Nov. 15-19, 2017. Statistical results are weighted to correct known demographic differences between the sample and the U.S. population.
See related:How and why to stop paying your children's debts , Do's and don'ts when giving teens their first credit card