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Providing Financial Assistance

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Providing Financial Assistance

 

 

 

 

 

 

 

 

 

Recently a report came out asking people who invest in the market if they provide financial assistance to their adult children, their parents, or both. The results may surprise you.

About one-third of U.S. investors** (32%) report they provide financial assistance to an adult child, to a parent or to both, highlighting one of the challenges individuals face in achieving or maintaining financial security in retirement. The percentage providing such aid is a bit lower among retired investors (25%) than among those still in their working years (35%).

Summary of U.S. Investors’ Financial Support to Parents/Grown Children

(Asked of 57% of investors who have a grown child) Do you currently provide any financial support to one or more of your adult children? (Asked of 62% of investors who have at least one living parent) Do you currently provide any financial support to one or more of your parents?

 

U.S. investors

%, All investors

%, Retired

%, Nonretired

Assist an adult child

24

22

24

Assist a parent

6

2

8

Assist adult child and a parent

2

1

3

Total assist

32

25

35

Total do not assist

68

75

65

More specifically, about a quarter of all investors (24%) give financial

help to one or more adult children (but not to a parent) and 6% say they help a parent only. Another 2% give monetary support to both an adult child and a parent.Overall, 46% of investors who have one or more grown children are providing them with financial support.
Also, 14% of investors with a living parent are doing the same.These findings are based on the first quarter Wells Fargo/Gallup Investor and Retirement Optimism Index survey, conducted Feb. 10-19 with a nationally representative sample of U.S. investors.
**For this survey, investors are defined as adults living in households with $10,000 or more in stocks, bonds or mutual funds, in an investment account or in a self-directed IRA or 401(k) retirement account. About two in five U.S. households meet these criteria, according to Gallup’s polling for the Investor Index.

Implications

Families perform an important safety net function in society. They often pay for their grown children’s education, supplement their children’s income in their early working years, help family members through a financial rough patch, or assist aging parents with healthcare or other bills.

However, as the Wells Fargo/Gallup data show, it does take a toll on the giver. Even among U.S. investors — those who have the means to accumulate at least $10,000 in investments — the majority indicate that the family support they provide negatively affects their own retirement savings at least a little bit. And for more than a quarter, it’s impeding their retirement security a moderate amount to a lot.

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