Generation Y (Gen Y) show striking levels of financial dependence on their parents. The Yconic/Abacus Data Survey of Canadian Millennials, conducted earlier this year for the Globe and mail surveyed 1,538 young people between 15-33. The results show that while many young adults are have started careers and achieved financial independence, just as many are relying to at least some extent on their parents. 43% of young adults aged 30-33 said they had not achieved financial independence.
Some of the results can be seen here
The impact Gen Y are having on their parents’ finances does not stop at living at home, though with 43% of people aged 20-29 living with their parents (according to the last census) this does provide a significant impact. Parents are also helping pay off student loans, pay bills and contributing to down payments.
The sweet spot for retirement savings has traditionally been from your mid to late 50s onwards to whenever you retire. At this point children were financially independent and mortgages were winding down, freeing up plenty of money to go into RRSPs and TFSAs. People often downsize their homes when their children are gone and the released equity can also be put towards retirement savings.
However now, with parents supporting children into their 30s there is less money to pile into savings, and downsizing can cease to be an option if you still need space for your adult children to live at home.
Ideally parents will not go into debt to help their children, nor will they dip into their retirement funds, but unfortunately many people are, and failing to save in order to help your children puts you in more or less the same position. It is important to try and take a step back to see what you can really afford to give.