United States and Canadian millennials are still apparently having a tough time adjusting to adulthood. Despite a temporary boom in the labor market, they’re still relying on the bank of Mom and Dad to cover their basic living expenses. Unfortunately, this is hurting their parents’ dreams of retirement.
According to a new survey by CIBC, two-thirds of Canadian parents say they’re feeling the financial strain of supporting their adult kids, who are defined as over 18 and not attending school.
The poll found that 25 percent of parents are spending more than $500 per month to cover the basic costs for their grown children, including rent, groceries, car payments, credit card repayments and cellphone bills. Indeed, free room and board was the most common expenses for parents.
But paying for their adult kids’ lifestyles is costing them a pretty penny. The survey reported that nearly half (47 percent) have hindered their ability to save for retirement because of their millennial children, while 20 percent confirmed it has delayed their retirement.
“Parents may have the will to help their adult kids but they may not always have the means,” said Christina Kramer, Executive Vice President of Retail and Business Banking at CIBC, in a statement “Having a serious talk about money with your grown child can be a sensitive topic – an independent financial advisor can help facilitate that conversation to assess how much help parents can reasonably provide.”
Here are the top ways parents are financially assisting their adult children:
- Free room & board in my home: 71%
- Help out with groceries/household expenses: 47%
- Pay cell phone bills (voice & data plans): 35%
- Car payments or vehicle-related expenses (full or partial contribution): 23%
- Rent (full or partial contribution): 17%
- Debt re-payments: 12%
- Contribution toward a down payment for home purchase: 5%
- Other: 21%
Poll: One-Quarter of Canadians Living Paycheck to Paycheck
The Bank of Montreal (BMO) released its annual BMO Rainy Day Survey on Tuesday. It found that nearly one-quarter (24 percent) of Canadians are living paycheck to paycheck without much of a rainy day, financial emergency fund.
Although Canadians have boosted their savings over the past year, more than half (56 percent) of Canadians have less than $10,000 in available emergency funds; 44 percent have under $5,000 and 21 percent have less than $1,000.
In the event of a job loss or unforeseen event, 29 percent admit their savings would last only one month or less. One-quarter report their savings would last them for more than one year.
A paucity of emergency savings has severely impacted Canadians. Close to half (46 percent) have increased their debt loads because of a financial emergency.
Canadians listed medical expenses (72 percent), job loss (71 percent), major car repairs (61 percent) and unexpected home repairs (59 percent) as the top emergency concerns.
“An emergency fund represents more than just a cushion – it provides peace of mind and helps reduce the risk of increased debt when faced with a financial emergency,” said Christine Canning, Head of Everyday Banking, BMO Bank of Montreal, in a statement. “Having the resources to handle unexpected expenses helps to keep the impact contained to that time period, avoiding further financial obstacles.”
Because of worries over their personal finances, a growing number of Canadians are looking at ways to cut back their spending, re-examining their finances and delay major purchases to boost emergency funds.
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