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The Real Cost of Supporting Grandma and Adult Children

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Financially supporting an aging parent or an adult child is costing some Americans as much as $12,000 a year.

A new study from TD Ameritrade examines the struggle of financially supporting an adult family member, through its survey of 1,000 American adults, all who have financially supported a parent and/or adult child in the past 12 months.

According to TD Ameritrade’s Financial Support Survey, one in five Americans provide financial support to a parent and/or an adult child. And, on average, a survey respondent who has financially supported either an adult child or aging parent in the past year reports having spent $12,000 to do so.

The survey also uncovers who Americans spend more money on, in regards to financial support.

According to the survey, financial supporters are are almost twice as likely to be supporting a mother (42%) than a father (23%) – and mothers receive $5,000 more support.

On average, survey respondents report spending up to $13,750 on a mother and $8,500 on a father.

Meanwhile, respondents report spending on average $10,000 on an adult child.

When asked to hypothetically choose between financially supporting an aging parent in need or an adult child in need, an overwhelming majority chose the parent.

“If forced to choose, financial supporters would support a parent (83%) over an adult child (17%) – a warning call to those who have not yet flown the nest,” the study states.

Twenty-two percent of respondents who supported family members said they needed to tap savings, while 30% said they made small sacrifices and lived more frugally.

However, the survey points out that these “financial supporters” hold almost $100,000 in debt on average, including $22,000 in unpaid credit card balances, personal lines of credit, or personal or student loans, and $75,000 in mortgage debt.

TD Ameritrade suggests — as does the article Advising the Squeezed ‘Sandwich Generation’ in the August issue of Research magazine — there is an opportunity for financial advisors and planners to help this group of financial supporters. “The financial downside of living longer may mean not only planning for our own extended retirement years, but also caring for aging family members in ways that can take a solid bite out of any well-laid plans,” Matthew Sadowsky, director of retirement at TD Ameritrade,  said in a statement. “And even beyond the financial implications, this could have an impact on family dynamics. With older generations it can be an especially difficult conversation to have.  But, it’s better to have the discussion and do some detective work now — as well as some planning — than get hit with a daunting financial reality later.”

According to the study, 79% of the survey respondents have not discussed financial support of others with a financial professional, which may be why some feel ill-prepared to provide financial support.

The study finds that more than a third (36%) of the survey respondents would delay retirement to continue supporting their children.

In fact, 40% of the boomers surveyed report they have already delayed their retirement due to recent economic factors (such as difficulty finding a job, more student debt and less job security).

A third of the survey respondents said they had delayed saving money for retirement due to recent economic factors.

If forced to retire due to unforeseen events, nearly half (48%) of the survey respondents say they would struggle to continue providing financial support.

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