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Retirement Planning > Retirement Investing

Older Americans Supporting Younger Generation, Not Vice Versa: EBRI

By Melanie Waddell

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The transfer of money to help family members stay afloat is flowing from older family members to younger ones, putting Baby Boomers’ retirement at risk, according to a just-released report by the Employee Benefit Research Institute.

EBRI’s report, Intra-Family Cash Transfers in Older American Households, found an overwhelming generational transfer of money flowing from older adults to their younger adult relatives.

From 1998 through 2010, EBRI found an increasing trend of transfers from older households (those where at least one member of the household is 50 or older) to family members.

Very few older households (4% to 5%) receive cash transfers from their families, compared with those who transfer money (38% to 45%) to their younger family members, the report state.

EBRI defines cash transfers as “giving money, helping pay bills, or covering specific types of costs such as those for medical care OR insurance, schooling, down payment for a home, rent, etc.” Both loans and outright gifts are counted.

Among those ages 50 and older, relatively younger households are more likely to transfer money to their families and relatively older households are more likely to receive such transfers.

The amount transferred from older Americans to their children and grandchildren generally goes down with age. Between 2008 and 2010, the average amounts transferred by households who had at least one member age 50 to 64 and 85 or older were $8,350 and $4,787, respectively, the report states.

The average transfer amounts from younger family members to older households are much smaller. During the same two-year period, households who had at least one member 85 or older received the highest average transfers among all age groups, and the average amount was $359.

“For the older households, cash transfers can reduce their retirement assets, raising concerns about retirement security particularly for low-income groups,” said Sudipto Banerjee, EBRI research associate and author of the report, in a statement. “Although cash transfers are more prevalent in high-income households, a significant percentage of low- and middle- income households transfer cash as well.”

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