The overwhelming reason why adult kids are financially supporting their parents today is insufficient retirement savings.

No other reason came close among the 926 people who completed a survey in the Carrick on Money newsletter for people aged 18 and up who provide financial support to parents. Just over 52 per cent cited a lack of retirement savings, while another 10 per cent said their parent or parents had outlived their savings.

A suggestion for anyone in their thirties and older: Have a conversation with your parents about their retirement savings. Ask if they have any. If so, how much and what kind. Though it’s not much talked about, adult kids are clearly playing a backstopping role in this country’s retirement system. Be prepared.

After retirement savings, the reasons why adult kids help their parents with money reflect a variety of social, financial and medical factors. Nine per cent of survey participants cited illness or disability as the reason for supporting parents, 4.8 per cent cited debt loads and 4.3 per cent cited divorce. Other reasons include cultural expectations, job loss and death of a spouse.

Even people who own or owned homes and who have pensions require help, the survey results show. Almost seven in 10 survey participants said their parents currently or previously owned a home, while just 12 per cent said their parents were lifelong renters. One in three survey participants said their parent or parents have a company pension.

Take note if you think your house is your retirement plan, or that having a pension means retirement security. Pension payments can be small if you work for an employer for a short period of time. As for houses, they are a financial responsibility as well as an asset. Coping with big repair and maintenance bills can be a handful when you’re retired.

The most common way adult kids help their parents financially is through periodic cash infusions – 38.5 per cent of people in the survey said they do this. Another 29 per cent said they make regular cash payments to parents. There’s also a lot of help with recurring costs like rent, cellphone bills and transportation. Just over 11 per cent said their parents had moved in with them.

Another common type of help is money used toward care. Included here are medications, the cost of retirement and long-term care homes and home care.

The survey was open to everyone aged 18 and older who provides financial help to a parent or parents. Data on the age of participants highlights the phenomenon of retirees supporting their retired, aged parents. Almost 22 per cent of participants were in the 60 to 69 age bracket, and another 5.4 per cent were aged 70 and up.

Half of participants (51 per cent) were between the ages of 40 and 59, while 17.5 per cent were 30 to 39 and the rest were between 18 and 29.

The age of parents being supported highlights how life expectancy has increased over the years. Eleven survey participants, or 1.1 per cent of the total, are supporting parents aged 100 and up, while almost 17 per cent support parents in their 90s and 33 per cent support parents in their 80s. Age 60 and up seems to be the stage in life where parents start getting financial help from their kids.

The amount of financial help provided by adult kids varies widely – the bookends are the 1.4 per cent of participants paying $100,000 and up per year and the 14.5 per cent paying $1,000 or less. In between, we have about 27.5 per cent paying between $1,000 and $5,000, 24 per cent paying $5,000 to $10,000 and about 29 per cent paying $10,000 to $50,000.

There could be an “each according to their means” aspect to this help. Almost 42 per cent of participants said they had no problem with the cost of helping parents, while almost 33 per cent called it tricky but doable. Twenty cent said they had to make sacrifices to help their parents, while 5.7 per cent said they didn’t know how much longer they could keep paying.

Here’s why you should start talking with your parents about their retirement savings in your 30s. There may be time to help your parents get on a better track for retirement by encouraging them to save more or more effectively for retirement. You may also get a picture of whether your help might be needed later on.

The Globe and Mail, June 7, 2023