Baby Boomers have a lot of bills to pay these days. Most of those bills aren’t theirs.
They’re helping to pay medical and utility bills for their aging parents, and even buying groceries for their moms and dads. And on the flip side, they’re chipping in for everything from car insurance to rent payments for adult kids they thought flew the nest.
All these handouts are creating uncertainty among the boomers about what the future holds for their own financial well-being, according to a report by Ameriprise Financial released this week.
The study, titled “Money Across Generations,” surveyed more than 1,000 affluent boomers, 300 parents of boomers, and 300 children of boomers, at least 18 years old, by telephone, and found tougher economic times all around for every generation. But the Baby Boom generation of about 77 million and born roughly between 1946 to 1964 is stuck between a family rock and an economic hard place.
“Boomers are feeling the pressure financially and emotionally,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “In many cases they’re sandwiched between children who are unemployed or struggling to pay down their student loan debt and aging parents who are facing complex health and financial issues. At the same time, they’re trying to prepare for their own retirement.”
About a quarter of boomers surveyed said they were saving for retirement, compared to 44 percent who were doing that in 2007, the last time this poll was taken.
And because of the financial pull from both parents and kids, twice as many boomers are focusing on clinging to the retirement funds they already have, up from 12 percent in 2007.
“Family and personal values are important when making any kind of decision, but it can be difficult to prioritize our family members’ needs against our own,” de Baca said. “Unfortunately, unconditional financial support can threaten or even sabotage retirement goals and security. It’s important to have open conversations with your family about your current financial situation and evaluate your ability to meet your own goals before offering any kind of support.”
Here are some more findings from the study on what boomers are doling out:
- 58 percent of boomers reported helping parents in some way with purchasing groceries (22 percent) or paying medical expenses (15 percent) and utility bills (14 percent).
- 93 percent said they provided financial support for their adult kids, including college tuition or loans (71 percent), allowed them to move home and live rent-free (55 percent) or helped them buy a car (53 percent) and auto insurance (45 percent).
- 34 percent said providing financial assistance to their kids has slowed down their contributions to retirement savings, and 10 percent said aiding parents is keeping them from squirreling away.
While most boomers don’t regret backing their adult kids financially, they’re not sure all this financial handholding has helped their offspring prepare for the future. Nearly half of those polled said, “they worry that their children do not understand what it takes financially to prepare for retirement, and 35 percent express concern that their children have not learned responsibility when it comes to money.”
Is it time to cut the kids off?
A new study from the University of Michigan found that parents with children ages 19 to 22 are helping their children with college tuition, rent and transportation averaging out to several thousand dollars a year. NBC's Brian Williams reports.