It looks like it's not just crushing student loans holding millennials back anymore — it's also their aging parents


Life is more expensive for American millennials compared to previous generations for a host of reasons: soaring rent and housing costs, pricier health insurance premiums, increasing childcare costs, and most popularly, crushing student loan debt. 

Now, there's another factor to add to the list: caring for aging parents.

16 PHOTOS
How baby boomers are losing $11K a year to their millennial kids
See Gallery
How baby boomers are losing $11K a year to their millennial kids

Boomers Are Providing Child Care and Household Help

Millennials report that the bulk of support they received in the past year — $8,684 — came in the form of unpaid labor. More than half of those surveyed said they got help from their parents with child care or running the household.

On average, boomer grandparents provided 14.3 hours of primary child care per week and 9.2 hours of back-up care or babysitting. Millennials also said their parents spend more than 10 hours a week helping them prepare meals, clean the house and run errands — all ways to save money, but they take time.

How This Happens

A quarter of the millennials surveyed said they couldn't afford their current lifestyles if their parents weren't donating time or labor.

This commitment could affect a boomer's ability to save for retirement or actually retire. If you're helping out your children, decide what trade-offs you're willing to make so you can secure your retirement while still providing support, said David Lynch, managing director and head of branches for TD Ameritrade.

"Keep in mind there could also be financial implications of providing child care if it means a grandparent is leaving or scaling back on their paid work," said David Lynch, managing director and head of branches for TD Ameritrade.

Boomers Are Helping Kids Pay the Bills

Nearly half of millennials said their parents helped them financially in the past year and gave them $2,543 on average, according to the survey. But they might be getting more support than they realize — or want to admit. See the financial gap between the boomer and millennial generations.

How This Happens

Grandparents said they provided their children with $4,527, on average, in the past year. Here are some of the bill payment estimates provided by millennials and boomers respectively:

Rent/mortgage: The biggest bill boomers helped pay was the mortgage or rent. The 15 percent of millennials who got help with housing reported receiving $2,033, on average. Boomers reported providing $3,462 in support, though.
Car payments: The survey found that 14 percent of millennials said they got help making car payments and received, on average, $787. Parents said they gave their adult children $2,239, on average, for car payments in the past year.
Groceries: Almost a quarter of millennials said their parents help them pay for groceries ($423, on average). Boomers said they gave their kids $898, on average, last year.
Utilities: Fifteen percent of millennials received support from their parents for utility bills and got $408, on average. Parents said they gave their children $607, however.
Cellphone: Almost 20 percent of millennials said their parents help them pay their phone bills. On average, they said they received $262. Parents, though, reported giving their children twice as much — $547, on average.

Boomers Are Helping Kids Pay Their Debts

Boomer grandparents aren't just helping their millennial children with day-to-day expenses. They're also helping them pay down debt.

The survey found that 12 percent of millennials said they got help making student loan payments last year. On average, they claimed to receive $625 from their parents. But boomers who said they provided their kids with support for student loan payments reported giving $3,758.

Millennials who got help paying credit card bills reported receiving $600, on average, in the past year. Parents reported giving their millennial children $2,051 for credit card bills, however.

Learn More: The Best Ways to Pay Off Every Kind of Debt

Why This Is a Problem

Unfortunately, many boomers are trying to pay off their own debt simultaneously. A survey by GOBankingRates found that boomers ages 55 to 64 have the second-highest percentage of respondents with credit card debt at 54 percent.

And 27 percent of the parents surveyed by TD Ameritrade said they used some or all of their savings to support their adult children or grandchildren. In some cases, boomers had to postpone their own retirement to help out their kids.

Boomers Are Helping Kids Pay for Entertainment

Not only are parents helping their adult children pay for necessary expenses, but they're also providing support for non-essential items. For example, 30 percent of millennials said their parents helped them pay for meals out and entertainment in the past year. Those who received support said they got $235, on average. Parents, however, reported giving their millennial children $632 for these purchases.

Boomers are also helping their adult children take vacations. Millennials who received support from their parents to take trips said they got $665, on average. Parents reported giving their children almost twice that much, though — $1,120.

Why This Is a Problem

The survey further found that 40 percent of grandparents support their kids and grandchildren because they want them to have a better life than they otherwise would be able to afford. The problem is that 22 percent had to cut back on meals out and entertainment for themselves to support their children. And 15 percent reported getting to spend less time enjoying life as a result of their generosity.

Are You Spending Beyond Your Means? How Long $1 Million Will Last in Retirement in Every State

Boomers Are Buying Toys and Clothing for Grandkids

It likely comes as no surprise that grandparents are buying toys for their grandkids. More than half of the millennials said their parents helped them buy toys and gave them $172, on average, over the past year. Grandparents, however, reported giving their millennial children $340 for toys.

Along with providing support for toy purchases, boomers often buy clothing for their grandkids. The 47 percent of millennials who said they received support to buy clothing reported getting $189, on average. Yet, grandparents said they gave $428. And 42 percent of boomers said they gave cash gifts to their grandkids — $371 a year on average.

Why This Is a Problem

Unfortunately, some boomers gave money they didn't have. Boomers have had to sell their possessions, take on extra jobs and find ways to make more money to support their adult children and grandchildren, the survey found.

Boomers Are Helping Pay for Grandkids’ Schooling

The biggest way boomers are helping their grandchildren financially is by contributing to their college savings. That might be okay if they have the cash to spare. Unfortunately, some boomers are sacrificing their own retirement saving efforts to support their grandchildren's educational endeavors.

How This Happens

Grandparents who provided this type of support over the past year reported giving $2,337. Millennial parents, however, estimated that they received only $1,134 for their kids' college funds.

Boomers are also helping with their grandchildren's current school expenses. Millennial parents who received support for private school tuition said they got $750, on average, over the past year. And 21 percent said they got help paying for school expenses such as supplies and outings — $236 on average. Grandparents reported providing $477.

Affordable Academia: 9 Creative Ways to Pay for College

How This Happens

Grandparents who provided this type of support over the past year reported giving $2,337. Millennial parents, however, estimated that they received only $1,134 for their kids' college funds.

Boomers are also helping with their grandchildren's current school expenses. Millennial parents who received support for private school tuition said they got $750, on average, over the past year. And 21 percent said they got help paying for school expenses such as supplies and outings — $236 on average. Grandparents reported providing $477.

Affordable Academia: 9 Creative Ways to Pay for College

Why This Is a Problem

Unfortunately, baby boomers aren't much better off when it comes to having a rainy day fund. The GOBankingRates survey found that 69 percent of adults ages 55 to 64 have less than $1,000 in a savings account. Having an emergency fund should be a priority for boomers, however.

"Grandparents will be more likely to stay on track for retirement by setting aside an emergency fund to cover unexpected expenses and developing a clear financial plan that can help protect and potentially grow their nest egg," Lynch said.

Boomers Are Happy to Help Despite Financial Strain

Lynch said the TD Ameritrade research shows the majority of grandparents don't view the financial support they give their children and grandchildren as a burden. While more than half find the combination of saving for retirement and supporting adult children to be stressful, they still put family first, he said.

If boomers value helping their kids, though, they need to have a plan so their finances don't take a hit. Boomers could set a retirement savings goal by using an online calculator to figure out how much they need to save to retire comfortably. Then they'll have a better idea of how much financial support they can give their adult children.

"It's all about setting limits and having an open dialogue with your adult child," Lynch said. "Work together to set clear limits and expectations for both financial support and childcare."

How to Solve the Problem

For boomers who are behind on saving because they've been supporting their kids, there are several options. To start, they should consider working longer, Lynch said.

"Staying in the job market even a few extra years can make a big difference in terms of additional savings and investing," he said. "It will also reduce the time that investors' nest eggs need to stretch in retirement."

If you're 50 or older, you can take advantage of catch-up contributions to a retirement account. You can contribute an extra $6,000 to a 401k in 2018. And you can contribute an extra $1,000 to an IRA.

You can also downsize to a smaller, less-expensive home to free up cash. And you can boost your Social Security payout by waiting until after you reach your full retirement age to claim your benefits. A bigger Social Security benefit could help your nest egg last longer, Lynch said.

The key is to take the time to develop a plan. Then boomers won't have to turn to their children for support one day.

Click through to read how kids are preparing to financially support their parents' retirement.

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Clare Ansberry of the Wall Street Journal found that caregivers are becoming younger: the number of unpaid young adult caregivers has increased by 2% since 2009, she writes, citing the National Alliance for Caregiving.

Currently, 6.2 million millennials and counting are acting as caregivers for a parent, in-law, or grandparent, she added, citing the 2018 AARP Public Policy report.

The financial burden of caregiving is undeniable. The average cost of elder care can range from $18,000 a year for adult day care to $91,000 a year for a private room in a nursing home, Business Insider's Rachel Gillett previously reported, referencing a survey commissioned by Genworth Financial.

12 PHOTOS
What millennials are spending their money on
See Gallery
What millennials are spending their money on

What’s Most Important to Millennials When Choosing a Retailer?

When choosing a retailer, millennials value price and the product selection. Sixty-three percent of millennials said price is an important factor, and 82 percent said the selection of products is an important factor.

In fact, millennials value price more than baby boomers (49 percent said price is most important), and they value selection less than Gen Xers (90 percent said selection is most important).

Did You Know? Here Are 9 Secrets Big Retailers Don't Want You to Know 

Photo credit: GO Banking Rates

Millennials Are More Likely to Seek the Best Deal

Millennials are also more likely to seek the best deal when making a major purchase, and rank price as very important when making a major purchase of $500 or more.

Sixty-three percent of millennials ranked price as very important compared to only 59 percent of Gen Xers and 49 percent of baby boomers. 

Photo credit: Getty

Millennials Spend More Time Researching Before Shopping

Approximately half of millennials (47 percent) spend one to three hours researching their finance options before making a major purchase, which is on par with Gen X respondents.

However, millennials are more likely to spend seven or more hours researching finance options than older buyers. Twenty-three percent of millennials said they spend seven or more hours doing research, while only 10 percent of shoppers age 35 and older said they do.

"It has to do with their online use, their social media activity where they're sometimes crowd-sourcing feedback on a product, retailer or brand, and with their nature to seek out the best deal," said Mike Rittler, head of TD Retail Card Services and interim head of U.S. Partnerships.

"Millennials, on the whole, are not impulse shoppers," he said. "They like to research, they like to feel confident that the retailer and brand align to their values, and they want to make sure they're getting the best price for an item, so they leverage a lot of channels in order to find this information." 

Photo credit: Getty

Millennials Are More Likely to Make Big Purchases

Millennials are spending more than their parents are right now. Eighty-one percent of millennials said they made a single purchase of $500 or more in the past year, compared to only 61 percent of baby boomers.

Do You Agree? 17 Signs Millennials Are Better With Their Money Than You 

Photo credit: GO Banking Rates

Millennials Are the Most ‘Brand Loyal’ Generation

Millennials are more brand loyal than any other age group, with 69 percent choosing the same brand for a major purchase in the last year. For comparison, only 58 percent of Gen Xers and 56 percent of baby boomers did the same.

This could explain why millennials are hesitant to try a new brand when making a major purchase, with only 17 percent saying they would. 

Photo credit: Getty

Most Millennials Are Not Shopping Online

This might come as a surprise, but less than half of the millennials surveyed — 41 percent — said they shop online "all the time."

However, "you need to factor in-app shopping with the millennial audience," said Rittler. "We're looking beyond retailers' websites to their app shopping. Millennials are the leading demographic when you look at in-app shopping. Combine that with online, and you've got a very e-commerce focused set of consumers."

Even if they are not shopping on retailer sites all the time, they are shopping online more frequently than older shoppers: Only 26 percent of Gen Xers and 17 percent of baby boomers said they shop online all the time. 

Photo credit: GO Banking Rates

Most Millennials Want Discounts When Shopping Online

When millennials shop online or with a retail app, 66 percent say the primary perk is the access to promos, coupons and discounts.

In fact, millennials care more about discounts than the other age groups, with 63 percent of Gen Xers and only 46 percent of boomers saying this was the primary perk of online and app shopping. 

Photo credit: Getty

Millennials Care Less About Seeing Products in Person

When shopping at a retail store, 93 percent of consumers over the age of 35 said the ability to see merchandise in person is important. Meanwhile, only 81 percent of millennials did.

This could be because millennials are more accustomed to shopping online than the older generations.

Insider Tips: 10 Secrets From Savvy Shoppers to Save You Money 

Photo credit: Getty

Millennials Care More About Window-Shopping

Forty-three percent of millennials said the ability to window-shop is an important aspect of shopping at a retail store.

Interestingly, they care more about window-shopping than boomers: Only 32 percent of baby boomers ranked the ability to window-shop as important. 

Photo credit: Getty

Shopping In-Store Is More of a Social Activity for Millennials

"Millennials still enjoy the social aspect of shopping," said Rittler. "They're making an event out of it. They shop with friends or family, they browse, they grab a coffee and window-shop. To this group, shopping is an event, not an errand. And in many cases, they enjoy doing it."

In fact, nearly half of millennials are heading to the mall as a social activity. Forty-nine percent of this age group said that the social attributes of shopping are important to them, found the TD Bank survey.

However, Gen Xers prefer the social aspects of shopping the most, with 50 percent ranking the social attributes of shopping highly versus only 32 percent of baby boomers. 

Photo credit: Getty

Millennials Still Seek Guidance From Sales Associates

When millennials are making a major purchase — defined by this survey as a single purchase of $500 or more — 61 percent said they seek help from a sales associate.

"I was surprised to see how much they value the input and help from sales associates," said Rittler. "If you look at our numbers, 18 percent of respondents felt that the sales associate was influential in their purchase decision, but that number jumps to 29 percent when you look at millennial consumers. They like the option to interact in person, ask questions and engage with a retail employee, which we may not have expected given their prolific use of online and mobile shopping channels."

But, baby boomers are even more likely to seek help from a sales associate, with 77 percent saying that they seek advice before making a major purchase. 

Photo credit: Getty

How Retailers Can Give Millennials the Optimal Shopping Experience

The retailer landscape is always changing — and so are the customers. To attract and maintain millennial customers, retailers should keep three things in mind: convenience, price and experience, said Rittler.

"We know that millennials are active online and they research regularly," he said. "In fact, they research online while they shop in store," said Rittler.

He predicts "retailers will see the 'buy online, pick up in-store' option become increasingly popular, as well as same-day shipping and delivery. These benefits and services appeal to millennials who want instant gratification when it comes to shopping today."

And "additional conveniences like a coffee shop in-store, a fast-casual restaurant in-store, free gift wrap, car-side delivery, charging stations, etc. — all of these things make for the kind of convenient and catered experience that millennials are expecting more and more," Rittler added.

Up Next: Millennial Money Traps and How to Avoid Them  

Photo credit: Getty

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Despite earning less, millennials are spending more than older caregivers, and they're doing it during significant life milestones. Scott Williams of the global initiative Embracing Carers told Ansberry that millennials spend 27% more of their incomes on caregiving than other generations in the same situation. One-third of millennial caregivers who have jobs earn less than $30,000 on average, Ansberry reported.

That's not to mention any benefit losses or reduced work hours millennial caregivers suffer due to the demanding constraints of caregiving. Some are even forced to relocate. One millennial caregiver Ansberry spoke to quit her job in New York City and moved to Florida to take care of her mother who had Parkinson's disease. 

Caregiving for elders can be a burden no matter where you live — especially for millennials, who can have a hard time affording to take care of their parents when they often rely on their parents for help. According to the Country Financial Security Index, more than 30% of millennials still live at home with their parents for financial reasons, and more than half have received financial assistance from a parent, guardian, or family member since turning 21, Business Insider previously reported.

Millennials born in the 1980s may be struggling even more so, considering they're the "lost generation" at risk of accumulating less wealth during their lives, struggling to catch up ever since they entered the workforce during the Great Recession.

Millennials are already carrying the weight of economic consequences and higher cost of living. The strain of caring for aging parents just makes the financial struggles millennials are already buckling under even heavier.

See Also:

Read Full Story