A "failure to launch" among many young adults has left more than half of Canadian parents financially responsible for — and sometimes financially burdened by — their adult children, according to a survey conducted on behalf of the Financial Planning Standards Council (FPSC).
In fact, says the Children and Financial Dependence survey, 51% of parents with adult children say those children still rely on them for financial support, while 45% of parents say supporting adult children impinges on their own financial goals.
Parents find that helping their children achieve post-secondary education, home ownership and financial independence can come at a price. For example, 45% of parents say that education costs will delay their retirement and 46% say it will prevent them from paying down debt.
"This is when [parents] really need an advisor to sit down and help them crunch those numbers," says Kelley Keehn, personal finance educator and the FPSC's consumer advocate. Often, parents want to help their children, Keehn says, but they don't consider how withdrawing money from an RRSP or a RRIF, or borrowing money, may affect finances in the long run.
"Another consideration for advisors to talk about with their clients is the estate ramifications," Keehn says. "These conversations are really tough for parents to have with their adult kids and I think it's a great opportunity for advisors to bring them up proactively."
The survey indicates that "centennials" — children under the age of 18 — won't be receiving the same level of financial support as their millennial elders. While 65% of parents with children over 18 either will or already have helped their children with a first home purchase, only 43% of those with centennial children intend to do so.
Gender also plays a role in determining which parents provide the most financial support for children. For example, 44% of men are likely to help children buy their first home, compared with 32% of women. Men are also more likely to sacrifice their own financial well-being for children; 22% of men, vs 12% of women, would postpone their retirement to help children buy a starter home.
Parents in Quebec, however, are less likely than parents in the rest of Canada to make these financial sacrifices. Only 12% of parents in Quebec said they will help their children buy a home even if it prevents them paying down debt compared with 21% of parents in other provinces.
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