The unenviable label of "sandwich generation," once exclusively ascribed to Gen Xers squeezed between the needs of aging parents and dependent children, now also applies to younger American adults, new studies suggest.
New research from Ameriprise Financial and BMO finds that financial interdependence now stretches across multiple generations, with parents, grandparents, and even young adults all navigating a complex web of support that is reshaping retirement planning.
According to Ameriprise’s Parents & Finances study released Friday, more than one-third of parents (36%) worry that financially supporting adult children could jeopardize their own retirement plans. While two-thirds (65%) believe they’ll have enough to live comfortably after leaving the workforce, many are still footing the bill for their children’s expenses well into adulthood.
Three-quarters (76%) of parents surveyed in the study, which covered Americans with an average of $500,000 in investable assets, said they are covering one-time costs like weddings or down payments, and nearly two-thirds (63%) are paying for ongoing expenses such as living costs and phone bills for children aged 21 and older. Nearly half (45%) are still paying adult children’s health insurance until the legal age limit, and a third (33%) are contributing to education costs beyond college.
Read more: Sandwich generation faces mounting financial strain as retirement savings take a back seat
This willingness to provide support is not limited to older parents. New findings from BMO’s Real Financial Progress Index this week indicated that 61% of Gen Z parents and 47% of Millennials expect to receive or request financial help from family in the coming year. At the same time, 71% of Gen Z parents and 62% of Millennials are responsible for caring for aging family members, compared to 46% of Gen X and just 13% of Boomers. The result is a growing cohort of Americans– across age groups – who are balancing the needs of children, parents, and their own futures.
“Families today are navigating a financial balancing act that spans three generations. This shift demands more than just budgeting – it calls for a thoughtful, holistic strategy that aligns short-term needs with long-term goals like legacy planning and wealth preservation,” said Leila Francis, national head of fiduciary advisory services at BMO, in a press release.
For many parents, the desire to support children is rooted in good intentions, but it can come at a cost. The Ameriprise study found that seven out of 10 parents (72%) experience parental guilt, and more than a third (35%) feel pressure to be the “perfect parent,” often leading to increased spending. More than half (52%) reported offering children treats or perks, while four in 10 (43%) overspent on items or experiences.
The Ameriprise and BMO data come on the heels of new research by the Alliance for Lifetime Income, which found 17% of consumers are supporting adult children age 26 or older; 10% are supporting their grandchildren, 7% are aiding parents or in-laws, and 9% are helping out other family members.
Among other sacrifices, the ALI research found 58% are willing to settle for lower standards of living, 54% would return to work on a full-time or part-time basis, and 39% would give up hobbies and personal interests.
“As they do, parents should be mindful of how the choices they’re making to support adult children today and into the future impact their own goals, particularly for retirement,” said Deana Healy, vice president of financial planning and advice at Ameriprise, in a press release.
Advisors may find themselves playing a more prominent role in helping families navigate these competing priorities. Nearly all parents (96%) who work with a financial advisor report confidence in achieving their top financial goals, with 78% saying their advisor was helpful in making decisions related to their adult children, according to Ameriprise.
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