How Long Do We Subsidize Our Kids?

The new thinking is that parents should be accommodating young adults to live at home as long as possible — is it a good idea?

By Bruce Frassinelli    Email: bfrassinelli@ptd.net

When my children had finished college back in the 1980s, my goal was to get them out of the house and into a responsible job as soon as possible.

Of course, I love my children, but I could not imagine any of my three boys sponging off their parents until they were 30 or older.

I am happy to say that my two older sons found jobs right out of college; my youngest went to medical school, so he didn’t start his five-year surgery residency until he was 27.

The conventional advice for me and other parents my age was to cut the financial relationship with our young adult children as soon as we could. Do we push them out — a sink-or-swim scenario — or do we keep them until they are able to take on financial responsibilities for themselves?

If we didn’t do that, we were viewed to be irresponsible, coddling adults who would regret allowing them to be on the family dole indefinitely. After all, who wanted to raise 20-something sloths closeted in their childhood bedroom watching TV or doing other activities that resulted in frittering away the days that turn into months, possibly even years?

Sorry, but now I am told that this is outdated thinking, even callous in the face of the fallout from the COVID-19 pandemic. I am told that giving a helping hand to adult children doesn’t mean that you are stifling their path to independence.

Our kids now face monthly rent payments that can be more than 50% of their take-home pay. Inflation is causing food prices to surge. Energy costs have risen significantly during the past year. If your children need to buy a vehicle, even an older model, it costs a bundle.

The new thinking is that parents should be accommodating young adults to live at home as long as possible, especially if they need to pay off large student loans. Even if they don’t have major debts, a few years of being rent-free can help them tremendously when they finally go it alone, we are now being told.

In another era, I was out of the house and on my own at age 22 when I graduated from college and landed a teaching job that paid $4,000 a year in 1961. I also had a part-time job at a radio station in the same community. But I really lucked out: I boarded with an elderly couple at whose home I had an upstairs bedroom and kitchen privileges, all for $1 a day. At another home, a couple with whom I became good friends, allowed me to have supper with them each night, also for $1 a day. So I paid $14 a week for room and board.

When I tell this and other stories from my youth to my grandchildren, who are just now making their way in the world, they roll their eyes and remind me that deals like this are no longer available except in fairy tales.

All of my five grandchildren, ranging in age from 20 to 27 are still being subsidized to varying degrees by their parents. One is still in college, one has a good job but still lives at home; another, who also is living at home after quitting a full-time job without another job to go to, just got an offer that she is considering. One lives with her fiancé, and the other is an ensign in the U.S. Navy stationed on the West Coast.

A big variant in this different generation of kids has been the COVID-19 pandemic. So many younger workers lost their jobs when there were massive layoffs — victims of first in, first out. Now, that jobs are plentiful again, at least they were before some of the high-tech layoffs of late, younger workers have more choices than previously.

A report from savings.com indicated that many young adults who were blindsided by the pandemic turned to a reliable safety net — their parents. From buying food to paying for their cell phone plan or covering health and auto insurance, half of parents with children over 18 provide them with at least some financial support. According to savings.com, these contributions to their kids amount, on average, to about $1,000 a month.

These children even have their own name now — they are called “boomerang kids,” because they return to the nest or require financial help to stay afloat.

I was curious as to whether some of these young adults, especially those who might have part- or full-time jobs, are contributing to household expenses while living with their parents, but savings.com in its survey found that two out of three do not.

For parents who are in their key earnings years, supporting grown children can threaten their own financial security, but most parents take the position that “my kids need me, and they come first,” even if it means that parents do without.

Financial experts caution, however, that when you lay out large amounts of cash to help your adult children, it deprives you of the funds that you are saving to reach your financial goals, such as paying off debt, building a nest egg for retirement and salting away money for long-term health-care costs. This could be the equivalent of robbing Peter to pay Paul. These experts advise that you should take care of yourself first, then help your adult children, who have to be able to fend for themselves, even if it is a bit painful at the beginning.

More and more grandparents, especially those who are in a position to do so, are coming to the rescue by either subsidizing their children or their grandchildren to get them over the financial hump.

I thought the advice of former educator Jenny Grant Rankin, who has written on the subject, was perfect: “The key is to be helpful but not to enable poor behavior.”

Your financial helpfulness cannot be an open checkbook. There must be expectations on the part of your children or grandchildren, and they need to be articulated so everyone is on the same page.

Here is the bottom line: Parents and grandparents might think that they are doing their children and grandchildren a big favor by continuing to support them as adults, but, in reality, the best gift they can give is personal responsibility and the will to let them make it on their own.