Pre-Retirees Report Financially Helping Adult Children While Caring for Parents
Close to one in three pre-retirees are financially supporting adult children as they continue to care for aging parents, finds new research from the Society of Actuaries (SOA).
The findings further stress a struggling landscape for those nearing retirement, as many continue to navigate supporting older children, parents, and themselves during an inflationary environment. The 2024 Retirement Risks Survey, released this month, shows that one in five pre-retirees are supporting aging parents or in-laws, even as only 23% expect to receive financial help from family.
The report, co-authored by Timothy Geddes, Hailey Johnson, and Griffin Lothrop, found that pre-retirees tend to provide the most support to children under age 18, followed by children over 18, including stepchildren. Others provide financial assistance to grandchildren either under or over the age of 18, parents/in-laws, and siblings.
“While few provide significant support for others, any non-trivial financial support for other family members such as parents/in-laws and siblings, shows that family financial pressures can be real and require advance planning and preparation,” noted the survey authors.
SOA’s research also broke down its data by race and ethnicity, finding that Black and African American pre-retirees were much likelier to provide support, and significant or primary help for grandchildren and parents/in-laws, compared to other race/ethnicities.
While Hispanic and Latino respondents were less likely to provide support for children or grandchildren, they were either on par or slightly likelier to provide financial help for parents/in-laws and siblings.
Impacts to retirement
Pre-retirees who deliver financial support to children or stepchildren under age 18 and grandchildren over 18 were likelier to feel the highest impacts to their retirement savings, whereas retirees reported much less impact to their savings with any financial support provided to loved ones.
Those who earned over $100,000 per year were more likely to say their support had a moderate or high impact on savings compared to lower-income individuals in all categories except for parents/in-laws. SOA guesses this could be due to lower-income individuals not actively saving for retirement, therefore financial pressures like providing support would not hinder savings.
Among retirees, those with lower incomes said providing family support has a higher impact on their savings, especially for those with children over age 18 and grandchildren under 18. Thirty-nine percent of respondents with household incomes under $35,000 reported that providing support is “moderately” or “very influential” on their retirement savings.
Level of Financial Preparedness
SOA’s research surveyed respondents on their level of preparedness prior to providing financial support to their loved ones. It found that pre-retirees generally felt less prepared than retirees, however 50% said they were “somewhat or very prepared.” Many tended to prepare for funerals/bereavement services (61%), home renovations and repairs (58%), and medical emergencies and health issues (57%).
On the other hand, retirees felt more prepared for these life events, including on funerals/bereavement services (78%) and repairs/renovations of a home (75%).
Pre-retiree respondents identifying as Black and African American or Hispanic and Latino were generally less prepared, while Asian American respondents were the most prepared, SOA reports.
Of those who were financially ready to provide support, respondents say they prepared by moving closer to family members, establishing or increasing savings for unexpected family expenses, diversifying investments across various asset types, having regular family discussions to plan, consistently using financial planning services and a financial advisor, enhancing insurance coverage, and pooling or combining assets within or across households.
Additional findings from SOA’s research can be found here.
SEE ALSO:
Gen X Planning to Retire Later Due to Caregiving and Inflation
Millennial Women Feeling Financial Toll of Caregiving
Caregiving and Unexpected Costs Add to Financial Struggles for Pre-Retirees
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
