Half of Americans with children 18 or older “have sacrificed, or are sacrificing” their own retirement security in order to help support their adult offspring, a new survey from Bankrate has found.
The findings come as part of a report that looks into the ages a person believes they should start paying their own bills. Bankrate found that parents are paying for a wide variety of bills—from credit cards to student loans and rent.
The survey also found that among younger age groups, there’s a belief that certain bills should be paid for later in life.
For example, Generation Z (aged 18-22) members surveyed think they shouldn’t have to pay for a high-priced item like health insurance until they turned 24. The ‘Silent Generation’ (aged 74+) said that paying for health insurance should start at 22.
Meanwhile, Baby Boomers (those aged 55-73) generally believed that a person should assume responsibility for their most important bills once they turned 18 or 19 years old.
The more expensive the bill, the more the discrepancy among the responses for each age group widened, according to the Bankrate study.
The most worrying finding of the Bankrate study, however, showed that parents are risking their retirement savings—in order to continue financially supporting their children.
While 60% of parents with higher incomes ($80k and higher) were more likely to put their retirement savings on the line, nearly 20% of those making less than $50k weren’t saving anything at all, the study showed.
“Disturbing is a great way to sum it up,” said Bankrate analyst Kelly Anne Smith.
“There is a huge retirement crisis in this country. We’ve done other surveys where we find that 1 in 5 Americans aren’t even saving for retirement. A lot of the responsibility falls on the consumer and many don’t even know how much they need to save,” she added.
“So when you throw this into the picture, it’s a bit of a double whammy,” Smith said.
A survey in December of last year found that roughly 40% of retirees were spending more than they had anticipated in retirement, fueling concerns that retirees were not planning wisely for their retirement.
And with the ‘sandwich generation’ of Gen Xers forced to take care of aging parents and adult children, they face greater financial pressures that is impacting their ability to pay off debt and put money aside for their retirement.
Bank of Mom and Dad
But with a plentiful jobs market and rising wages, some have asked why millennials and Generation Z are relying on the ‘Bank of Mom and Dad.’ According to Bankrate’s Smith, delayed entry into the workforce is partly to blame.
Younger adults “are staying in school longer, because higher education is getting more popular,” she explained.
“Education is getting more expensive and they aren’t getting that immediate push to enter the workforce right away. So they aren’t entering the workforce immediately like previous generations,” Smith said. “And they need help paying the bills.”
And despite wage growth, Smith explains that millennials suffered greatly after the recession.
“Wages have bounced back since the recession, but it’s been lagging. There’s a very different economic reality for them. Not all of them can handle it on their own,” she said.
Ironically, achieving advanced degrees—which normally translate into higher paying jobs—also causes some adults to rely on their parents longer,” Smith pointed out.
With a $1.5 trillion student debt crisis and rising average payments, Smith suggested that student loan debt “has a very strong presence in the foundation of this.”
Addressing the elephant in the room
While parents might think they are doing the right thing for their children, Smith said that helping your children financially for too long does them no favors in the long run.
With retirement accounts at risk, it’s critical for parents to have a conversation with their children and come up with a “game plan” — no matter how uncomfortable the conversation.
“You don’t have to yank the cord right away,” she said.
“What’s most important is that the parents put themselves first, because of the retirement crisis,” Smith added. “It’s about a compromise at first, and moving towards something that will make them more comfortable in the future.”
Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.