Financial Ties to Parents and Children Affect Boomer Retirement

Boomers, though arguably the most prosperous generation in American history, face mounting demands on their financial resources from both their adult children and their aging parents.

In fact, one in six Boomers surveyed is “sandwiched,” providing assistance to both their parents and adult children, according to Ameriprise Financial’s Money Across Generations study.

Boomers surveyed indicated they are using non-retirement related funds to finance their assistance to parents and children. Although half said they are using their day-to-day spending money to assist their adult children, four in 10 Boomers said they draw from their “regular savings,” and one in six even resorts to taking a loan.

Only 6% admitted to pulling money from their retirement savings to help their adult children. In addition, while only 9% of Boomers surveyed said assisting their parents has hurt their retirement savings, twice as many (29%) said assisting their adult children has slowed their savings progress.

The majority of Boomers surveyed said if they got a sudden windfall, they would save it for retirement. If they suddenly had an extra $10,000 and could allocate it to just one thing, 57% said they would put it aside for their retirement. The remaining Boomers said they would opt to spend it on their children (17%), themselves (14%), their grandchildren (5%), or their parents (3%).

Helping Children and Parents

Two-thirds of Boomers surveyed are helping their adult children pay off college loans or tuition, and more than half are contributing to the purchase of a car, a press release about the study said. In addition, more than one-third are helping to cover living costs that include co-signing loans or leases, medical insurance, rent and utilities, and car payments. Overall, more than nine in 10 Boomers said they are financially assisting their adult children in at least one area.

The study also found a considerable number of Boomers are helping their aging parents monetarily in ways ranging from buying groceries (22%), helping with medical expenses and utility bills (15% each), and contributing to rent/mortgage payments and long-term care (10% each).

When asked to choose between the needs of their adult children and their own need to save for retirement, Boomers began to make the connection, Ameriprise said. For example, 65% of Boomers said they would contribute to their own retirement savings at the necessary rate over helping their adult children buy a car or pay off credit card debt.

“It’s when people begin to see their financial generosity as something that must be balanced with their overall financial goals that they appear to understand how much it could impact their ability to fund their retirement,” said Craig Brimhall, vice president of retirement wealth strategies, Ameriprise Financial, in the release. “The reality is that most Boomers already are not saving enough and many still haven’t calculated what they’ll need in retirement.”

Telephone interviews were conducted among 1,001 affluent Baby Boomers (those with $100,000 or more in investable assets); 300 parents of Baby Boomers; and 301 children of Baby Boomers at least 18 years old. Copies of the study report are available at