By now it’s no secret that parental support for Millennials – the generation born between 1982 and 2004 – is extensive, quite a bit more than previous generations received (see How Much Being a Grandparent Will Cost You). Case in point: For the first time in more than a century, adults between the ages of 18 and 34 are more likely to live with their parents than with a spouse or partner, according to a 2016 Pew study.
Parental Support for Young Millennials: More Than You Thought
A more recent study reveals that Millennials, now the largest generation, may receive even more financial assistance from their parents than previously suspected. Just how much cash are the parental units handing over to their grown Millennial children each year? A lot.
According to the study, which was conducted by the Institute for Social Research Transition Into Adulthood, a whopping 40% of young adults between the ages of 22 and 24 receive significant financial support from their folks. These Millennial twentysomethings collect an average of $3,000 in handouts from Mom and Dad each year. That comes out to about $250 a month – enough to cover nearly 30% of rent in most U.S. metro areas. While some use the money to cover housing costs, many use the parent-provided dough to fund a business startup or as a down payment on a home.
Not surprisingly, the career path Millennials choose affects the level of parental financial assistance they receive. Those who go to work in farming, construction, retail and personal services receive the least amount of cash. At the other extreme, Millennials who choose a career in art or design receive the biggest handouts – $3,600 a year on average.
This is a major boost in parental support as compared to past twentysomethings. In the 1980s fewer than half the people in this age group received financial support from their parents. However, by 2010 nearly 70% of them were accepting cash from Mom and Dad. (For more, see Money Habits of the Millennials.)
Moochers or Economic Victims?
Many critics call Millennials “moochers,” saying members of this financially dependent, entitled generation are the product of an overly watchful upbringing by helicopter parents. However, most Millennials will tell you that they’re merely the victims of an unforgiving economy and a cutthroat job market.
Many graduated during or in the aftermath of the Great Recession, one of the most brutal economic downturns in U.S. history. Then there’s student loan debt: Seven out of 10 people who graduated from college in 2016 are carrying an average student debt load of more than $37,000 – a $10,000 leap from just five years before.
As they attempt to chip away at this massive debt, many Millennials say they cannot focus on other savings goals. Only one-third say they have a 401(k), and a mere 20% say they are contributing to other investments. Fewer than half are saving for retirement or a house.
In the current economic environment, Millennials (and their parents) report that it’s simply more difficult for them to become financially independent as quickly as previous generations. According to one survey, Millennials and their parents agree that the younger generation faces more obstacles when it comes to achieving financial goals, such as buying a house, supporting a family and saving for retirement. (For more, see Financial Tips for Millennials Paying Their Own Way.)
The Bottom Line
There’s no question that Millennials receive much more financial support from their parents than previous generations did. But this generation also faces a tough economy, massive student loan debt and a highly competitive job market – all reasons that many are struggling to achieve financial independence. But down the road, the help may go two ways: Many Millennials plan to pay their parents back. In fact, 41% say they expect to provide monetary support to their parents in the future.