Support for Family Members Alters Retirement Plans

A survey conducted for Putnam Investments found 15 million workers age 45 or over are providing financial support for an aging parent or adult child, and that is altering their retirement plans.

According to a press release on the survey, about 6.2 million of the approximately 29.3 million working adults age 45 or older that have at least one living parent provide financial support to their parents. About one-quarter of this group said their efforts to provide parental support will likely postpone their own retirement or reduce their savings. Forty-four percent said they expect to work in retirement as a result.

Additionally, approximately 23.5 million working adults age 45 or older have at least one child age 25 or older, and almost half (45%) said they provide financial support for grown children. About one in four (20%) said their grown children live with them and 4% said they write a rent check for grown children, the release said.

Of those providing support for grown children, 43% said they expect it will force them back to work after retirement; 38% said they expect to save less; and 29% anticipate delaying retirement. Seventy percent of respondents providing support for adult children said they did not consider that in their financial planning.

Still, despite the negative effect to their retirement plans, 57% of those supporting parents said they are “very pleased” to do so, as did 38% of those supporting their grown children. However, respondents who support parents said lessons learned include that they should have saved money specifically for parental support, used a professional adviser to help plan for retirement, and bought long-term care insurance for their parents.

“The We Generation: When Retirement and Family Needs Collide” study was conducted online by Brightwork Partners in August 2006 for Putnam Investments and includes interviews with 5,419 respondents – of which 1,740 were working adults at least age 45 with at least one living parent and 1,330 were working adults at least age 45 with at least one child age 25 or older.