Boomers' Retirement in Jeopardy as Dependent Kids Threaten Financial Security

The latest generational culture clash is unlike any other. First: It's not about culture, per se, but paying bills. And in many cases, parents (Baby Boomers or Gen X'ers) are siding with their millennial and Gen Z children.  Basically, children are asking for—or expecting—their parents' financial help well into their 20s, and parents are obliging, to the point that parents are draining their savings and retirement accounts. The trend threatens to upend financial security for both generations. Read on to find out what parents who've been there and spent that say you should do instead.

"Courtesy of skyrocketing rent prices, soaring inflation, student debt, and a turbulent post-pandemic job market, parents of Gen Z in particular may have to support their children more than previous generations," Fortune reported this week.  And children are expecting it: Millennials and members of Gen Z say on average they shouldn't have to start paying any bills until they're 22. In a recent survey from Bankrate, 68% of parents say they've financially supported their adult children, compromising their own finances—by delaying retirement, paying off debt, or tapping into emergency savings—as a result.

Seattle resident Mark Lacy, 65, told Fortune that he's pulled $400,000 out of his retirement account to help his two sons, now in their 30s, since they graduated from high school, paying for pricey items like college tuition and plane tickets.  This year, he said, the "Bank of Dad" was shuttering. "For some reason, my generation has felt this great obligation to keep paying and allowing our children to avoid taking adult responsibility," he said. "I don't know where it came from because our parents didn't do that, to help our children avoid the reality of adult lives.  "I'm convinced that this weakens our culture and our economy by continuing to coddle adult children and not send them from the proverbial nest to take on that responsibility."

Recent studies have found that a majority of older Americans wish they'd set better financial boundaries with their children and other relatives.  Lacy said peer pressure and the desire to keep up with the Joneses has driven his generation to spend more on their adult children. "You see these other kids getting these benefits and your children are seeing that happen. Some of it you do to keep the peace—write the check and move on," he said.  But ultimately it "all comes down to the parents," he added. "We're the ones that have to have the responsibility to say, 'I don't care what Johnny next door has, we're not doing it.' You have to have the backbone."

California entrepreneur Tonya McKenzie and her husband never planned on supporting their children past the age of 18. But they told Fortune they've been spending $30,000 a year to supporting their son, now 23, who chose to attend private Sarah Lawrence College on a basketball scholarship.  Her advice: "Start to save early. We hear it often but we always think we have enough time. The truth is you're wasting time by not starting early. Diversify your investments so it can come from various different ways, and teach your children that we make choices when we come to money. Everything you want isn't what you need."

Experts say that without "learning, limits, and advice," financial support can be harmful to both children and parents.  Lacy has similar advice for parents faced with children expecting handouts. "Sit down with a calculator and a calendar and do the math," he said. "You have to be willing to have difficult conversations not only with your spouse but with your children, have the courage to live in the truth."

"Hindsight's 20/20. If I had it to do over I would've held more firm on some choices. I only have so many years to replace the dollars I've given them," he added.