Parents of millennials are finding themselves shouldering more responsibility in providing financial support to their young adult children than their own parents did years ago, according to a study from Toronto-based Bank of Montreal’s (BMO) wealth-management arm released on Wednesday.
Although 48% of parents with children aged 18 to 34 received little or no financial assistance from their own parents at that age, only 20% of young adults currently between the ages of 18 and 34 can say the same, the survey states.
“Times have changed and the way each generation reaches financial independence differs,” says Chris Buttigieg, senior manager, wealth planning strategy, BMO Wealth Management, in a statement. “Parents should assume that they will be providing more help to their children than they received themselves when they were transitioning into adulthood.”
Parents of millennials are considering some important choices in order to provide that additional assistance, with half saying they are willing to retire later than planned. Other options on the table include saving less for retirement (33%), having a less comfortable retirement (32%), taking on debt (22%) and withdrawing from their retirement savings (19%).
Those possibilities are motivated by the anxiety parents feel about their children’s financial prospects with 41% worried their kids will have financial problems caused by debt; 34% feeling that their sons and daughters will have difficulties achieving financial independence; and 31% concerned their children may not earn enough or will suffer from a lack of employment.
“It’s important for parents and their adult children to have open communication with each other about their expectations for financial support to avoid any misunderstandings,” Buttigieg says. “These conversations will also give children an understanding of the limits to their parents’ resources so that they can account for this as they begin to take responsibility for their own finances.”
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