A recent poll from RBC shed light on an interesting dilemma that many Canadians are facing: trying to save for retirement while financially supporting adult children.
The poll found almost all parents (96%) with children between the ages of 18 to 35 said they have financially supported their adult children in some capacity. And while this is to be somewhat expected, almost half of those parents (48%) also said they are still supporting 30- to 35-year-old children.
Furthermore, the majority of those parents said they are in a position to help their adult children, but 36 percent said they are worried about how it may eventually impact their retirement savings, and one-third said it may prolong their retirement plans entirely.
One of the most common reasons why parents continue to subsidize their children’s financial needs is because they believe their children are truly struggling to become financially independent.
This is especially true in British Columbia, where almost two thirds of parents (62 percent) said their kids are struggling, whereas only 33 percent of parents in Quebec said the same.
How Canadian parents are supporting their adult children
On average, Canadian parents estimated they spend $5,623 annually to support their 18- to 35-year-old children. In comparison, Canadian parents with children aged 30 to 35 said they spend $3,729 on average annually to help their child financially, with parents in B.C. spending the most ($5,279) and parents in Manitoba/Saskatchewan spending the least ($767).
Notably, most parents reported the financial support went towards education costs (69 percent), living expenses like mortgage, rent and cable (65 percent), as well as cell phone bills (58 percent).
“It’s human nature for parents to put their children first, but when it comes to balancing financial needs, the best advice is to pause and take a look at your whole financial picture,” said Rick Lowes, vice-president, Retirement Segment, RBC in a release.
Lowes recommends parents have an open and frank discussion with their children regarding the financial needs of the child alongside the retirement goals of the parent.
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