The vast majority of Canadian parents are subsidizing the lifestyles of their adult children, and many may be jeopardizing their own retirements to do so, according to a poll by Toronto-based Royal Bank of Canada released Thursday.
The 2019 RBC Family Finances Poll found that 96% of parents with adult children between the ages of 18 and 35 have supported those children financially in some capacity after they reached legal age, mostly for education costs (69%), living expenses (65%), and cellphone bills (58%). Nearly half of parents with children 30 to 35 are still providing support.
Those still supporting adult children aged 18 to 35 estimate that they provide an average of $5,623 in support per year; those still maintaining children 30 to 35 spend an average of $3,729.
The troubling side effect, according to the survey, is that about one-third of parents say they’re worried about the impact of these expenses on their retirement savings; another one-third say they may need to postpone retirement plans entirely because of them.
“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 of RBC’s retirement segment, in a statement.
Advisors should encourage clients to have a “frank conversation” with their adult children about finances, plans and expectations.
“If you can openly discuss your retirement goals alongside their financial needs, it will be much better for everyone in the long run,” he said.