Helping Adult Children Financially – Post-Boomer Challenges
In my first Sixty & Me blog about helping adult children financially, I noted that today, adult children of the Baby Boom generation live in a different financial reality. In this blog, I’ll cover specific issues, such as housing, student loan debt, and other challenges they face in their quest for financial independence.
Housing Hurdles
Many Baby Boomers achieved the goal of home ownership in their young adult years. Their offspring have not been so fortunate. A 2021 CNBC analysis showed a troubling gap between the average income of $144,192 needed to afford a home and the actual median income of $69,178.
This gap results in younger generations being less likely to be able to afford a home. According to Apartment List’s 2023 Millennial Homeownership Report, Millennials (adults aged 28-44) lag behind previous generations in homeownership by age 30.
| Generation | Homeownership by Age 30 |
| Millennials (1979-1995) | 42% |
| Gen X (1964-1978) | 48% |
| Baby Boomers (1946-1963) | 51% |
| Silent Generation (1925-1945) | 60% |
This trend is confirmed by the fact that today’s homebuyer is, on average, 44 years old, compared to 25-34 in 1981.
The report also showed that younger generations are losing confidence in their prospects for owning a home. Of Millennials studied in 2018, 13% said they would probably be renters forever. By 2022, this figure climbed to 25%.
Even as renters, their budgets are under stress. Since 1980, average monthly rents increased 8.85% per year even though inflation over the same was 3.09% on average.
Luckily, many Boomer parents are helping by contributing via gift or loan for a downpayment for a house purchase because the young would-be homeowners are often weighed down with student loans and credit card debt. A full 22% of home buyers ages 24-32 depended on such help from a friend or family member.
Student Loan Burden
The cost of post-secondary education has soared over the past several decades. The National Center for Education Statistics (NCES) reported that average annual undergraduate college costs jumped from 1963 ($1,248) to 2020 ($27,673). When federally guaranteed student loans were rolled out in 1965, students (Boomers) often could cover higher education costs through employment earnings, help from their families, scholarships, etc. Their children were not as lucky as it is rare to find anyone today “working their way through college.”
Instead, students often borrow to cover college costs. This has driven student loan indebtedness to $1.74 trillion, with an average monthly payment of $503, which the typical borrower will pay for 20 years.
Substantial student debt has impacted borrowers’ long-term financial stability and wealth-building ability. As author Anya Kamenetz (Generation Debt, 2006) states, these borrowers are “waiting longer to get married and have children, making people less likely to own a home, start a business or leave their hometowns.”
Credit Card and Other Debt
Many Americans, not just students, have a love/hate relationship with debt of all forms, especially credit cards. According to the Federal Reserve, in Q3, 2024, credit card debt stood at $1.166 trillion.
It’s more than just credit cards. Averages for the other major non-mortgage debt categories show households of all ages carry a significant amount of debt.
Average nonmortgage debt balances by generation
| Debt type (balances) | Gen Z | Millennials | Gen X | Boomers | |
| Auto | $9,894 | $14,836 | $16,836 | $10,611 | |
| Credit card | $2,789 | $6,408 | $8,917 | $7,564 | |
| Student loan | $7,067 | $15,014 | $12,680 | $5,083 | |
| Personal loan | $1,915 | $5,299 | $7,348 | $5,050 | |
| Total | $21,665 | $41,557 | $45,781 | $28,308 | |
As might be expected, Gen X and Millennials carry the most significant load since they are most likely to have responsibilities like helping to pay children’s college costs as well as caring for aging parents. Gen Z (1996-2012) has less debt simply because they have not had time to accumulate it. Overall, the effect is that the need to pay off debt impedes efforts to build wealth.
Childcare Load
Today, adult children with their own children endure significant cost challenges. The Economic Policy Institute reported in 2020 that U.S. households with children spend between 19% to 29% of their income on child care, depending on location, number of children, and type of care.
Young workers depend on stable employment as one of the main ways to build wealth. Yet, a 2022 study by the bipartisan Council for a Strong America found that expensive and difficult-to-find childcare options were negatively impacting young working parents in terms of:
- Less time at work
- Lower effort and productivity at work
- Work disruptions
- Diminished career pathways
Retirement Savings Obstacles
Recent inflation woes have exacerbated an already troubling trend among post-Boomer generations struggling to save for retirement. The Goldman Sachs Retirement Survey & Insights Report 2022 showed that post-Boomer generations perceive significantly more hurdles to saving for retirement.
What Affected Your Ability to Save for Retirement?
| Impacted Savings Ability | Boomers (1946-1963) | Gen X (1964-1978) | Millennials (1979-1995) | Gen Z (1996-2012) |
| Too many monthly expenses | 56% | 72% | 84% | 82% |
| Caring for or financially supporting family members | 38% | 63% | 79% | 75% |
| Paying down existing loans, including student loans | 36% | 59% | 76% | 75% |
| Time out of the workforce for child or elder care | 31% | 55% | 72% | 75% |
| Credit card debt | 40% | 55% | 71% | 58% |
| Saving for college | 14% | 43% | 67% | 63% |
| Other financial hardships | 51% | 67% | 76% | 79% |
Despite these challenges, many members of the post-Boomer generations are saving for retirement. One encouraging fact is that younger people are starting to save for retirement earlier in their careers. However, given the median amount saved so far, many members of all three generations have a long way to go before accumulating meaningful savings to fund a comfortable retirement, including around 10% of each generation with no retirement savings.
| Generation | Age Started Saving* (Median) | Estimated Median (including $0) | No Retirement Savings |
| Gen X (1964-1978) | 30 | $82K | 11% |
| Millennials (1979-1995) | 25 | $49K | 10% |
| Gen Z (1996-2012) | 19 | $29K | 9% |
* Workers who are saving for retirement through an employer-sponsored retirement plan and/or outside of work.
Can Boomers Make a Difference?
Post-Boomer generations face significant financial headwinds. Boomer parents fortunate enough to have financial flexibility may be able to offer some welcome help. Nevertheless, parents need to honestly assess if they have such flexibility. In the next blog in this series, I’ll cover the questions parents need to answer before throwing out a financial lifeline to their adult children.
Let’s Have a Conversation:
What financial help have you provided to your adult children? Do you think post-Boomer generations are worse off financially? What expenses take the biggest toll on your adult children’s finances?
Tags Adult Children
I think the point of the article is that our generation did much better financially in the aggregate than millennials will. I did do well in my career and with the help of my husband who was a very good steward of our finances (since passed away). I have helped 2 sons with down payments on houses and one son with rent on one apartment for 9 months so he could take a plum fellowship that has led to a great job. Not every retiree is in the situation to be able to do this but I think this article and others like it have helped me understand the situation and how different this generation is compared to previous in terms of cost of living, salaries and savings. My financial advisor is not as supportive of me helping and I have no one to talk to about whether I am doing the right thing or not but my husband acknowledged before he died that it was going to be much tougher for our sons and that we had the resources to help—I hold on to that guidance as I navigate retirement.
I think if you are able to help, and do so, it is nice to be able to see the rewards of that while you are still here. Wills are nice and everything, but I think the young people of today need help now, more than later. This is my opinion.
My children had it easy. We had a healthy income. College was paid for, they took care of grad school by being T.A.’s.
I’m in a good position financially (yes, I have been lucky) and I do gift them money each year to help with things. They have good jobs but you never know when that could end.
Wish I could say the same about my my adult kids. They are adults and self sufficient to a point. But I’m always having to step in and rescue them from the Landlord if the utility company or the cell phone that’s about to be cut off. I am $45000 in credit card debt because I’m borrowing money to pay their debts.
Peggy, please have a conversation with your children…that you will no longer be financing their debt. Don’t give another dollar, show them your cc bill. Peggy, by financially supporting them you enable them to take advantage of you. Financing their debt isn’t your responsibility. This may sound harsh but now it’s your time to live and not have those financial worries. Allow your children to stand on their own 2 feet and let the chips fall where they will. Take care of yourself Peggy
Running out of money is a present fear for most retirees. The 3 biggest things are: not having a budget, not thinking abt inflation, but the number 1 thing I think is helping out adult children with their finances. That’s something I wouldn’t do. They’re young and have the rest of their lives to work and build wealth. Luckily they’ve never needed my help. But as a retired couple we have no other way to make money, except our investments, and we’ll need them one day.
We did pay for our boys university and they took small loans which was paid back at 10 months while they lived at home. But now, financially, they’re on their own, just like my husband and I were when we started out.
Completely agree, Joyce. Once we funded their very expensive educations, there was hardly anything left for our own retirement. They are still earning and they have many years ahead in which they can save (if they will: one sibling does, the other does not).
Our other significant financial gift to them is that we will not turn to them for our old-age care. I think that is something they ought to be thanking us for every day. Dear Son, who is good with money and saving, does mention it gratefully from time to time but Irresponsible Daughter really hasn’t a clue. Not our problem. W taught them financial literacy and good saving habits early in life and it “took with him but ot with her. We did what we could.
A close friend of mine sends a modest Christmas gift to her adult children each year, along with a copy of her CCRC Bills (around 8K a month) marked PAID—that is her gift to her adult kids!
Dear Liz, What a nightmare retirement is becoming with our adult children coming at us
for money because life is so expensive.You are so right they have many years to get it
together, but when you have an adult child that is stalled it is so tough to demand respect and gratitude for the money we have already given them.
Car expenses, mortgages,healthcare. Where do you start when your 50 year old has lost his job and needs my help.. thank you,
Does he get unemployment? Did he have six month fund Put away for bills in the event of being unemployed. It’s not your burden to finance him. He needs to take any job he can until he gets the job he wants. Just let him know that you love him but ma’s atm is closed. You NEED that money for you.
We are in a similar boat. One child is always asking for money. He’s just paid his house loan off. Bank of mum and dad has shut down. The other is permanently on a sickness benefit. We bought him a house and we pay a lot of his bills like healthcare so he will never be self sufficient. We also have to be careful that there is money left after we die so he can still be supported. Here in New Zealand all our costs have gone up. Rates, insurances and groceries. We retired with a lot of money deliberately but the cost of living is eating into it. My parents thought they had plenty for retirement but it dwindled down and cost of living rose and ate most of it.