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Paying the price for supporting adult kids, aging parents

Many Americans, in debt themselves, are struggling even more financially as they provide monetary support to their adult children and other family members.

One in five U.S. adults have provided financial support to a parent and/or adult child over the past 12 months, costing these financial supporters about $630 billion, according to a new study by TD Ameritrade.

Of these financial supporters, the generation that spends the most is millennials, according to the study. While baby boomers and Gen Xers have each provided an average of $9,700 over the past year to either parents or adult kids, millennials have supplied $18,250.

Cash money dollars
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Generous generation

"That is startling," said Matt Sadowsky, director of retirement at TD Ameritrade. "When many of them are just getting started, you have to believe it's going to take a big chunk out of their [savings and retirement] plans."

The study considers millennials as those ages 18 to 34; Gen Xers, 35 to 50; and boomers, 51 to 69.

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Generationally, 25 percent of boomers, 19 percent of Gen Xers and 20 percent of millennials are financial supporters, according to the study. Of the boomers who are financial supporters, 8 percent of their support goes to parents and 19 percent to adult children (defined as children who have completed their education). The Gen X breakdown? Thirteen percent support parents and 8 percent provide for adult kids. Among millennials, 19 percent support parents and 1 percent give financial support to adult children.

One thing that concerns financial industry pros is that these financial supporters, regardless of their generation, are not necessarily in the best financial position to do so. They carry, on average, $97,000 in debt, of which roughly $75,000 is from mortgage debt. The remainder, $22,000 comes from unpaid credit card balances, personal loans/lines of credit and student loans.

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"It makes it a lot harder to keep your head above water if you have to support family members and still try to service your debt," Sadowsky said.

He pointed out, however, that millennials carry smaller credit card balances than older generations: $2,000 for millennials vs. $5,000 for boomers and $4,000 for Gen Xers. "The positive is that as of right now, millennials are not following in those footsteps," Sadowsky said.

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Avani Ramnani, a certified financial planner, said that increasing personal debt while trying to support other adults could be troublesome.

"For clients who might be attempting to support higher education [for their adult kids], we ask them to have the children take out student loans," said Ramnani, director of financial planning and investment management for Francis Financial.

Turning to a pro

"The children can get loans for education, but no one will give loans to the parents for their retirement," she said.

Also, just 21 percent of financial supporters have discussed their situation with a financial professional. Millennials, however, are the ones who appear more inclined to turn to a pro: Twenty-nine percent of them have consulted with a professional, compared with 18 percent of both Gen Xers and boomers.

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TD Ameritrade's Sadowsky said that, given the financial stereotype of millennials—that they are more likely to be fine with automated investments and online options for personal financial management—it is interesting that they seem more likely to seek out financial advice for their situation.

But he added that "given the extent to which millennials are providing financial support, and the dollar amount, and where they are in their own financial life, you might expect them to seek out help more."

"Financial advisors can help make sound decisions while balancing [your own] long-term financial security with the emotional need to support other adults in your life." -Avani Ramnani, director of financial planning and investment management at Francis Financial

Ramnani at Francis Financial pointed out that sometimes a financial advisor can help make tough decisions for people and might offer options that haven't yet been considered.

"Ultimately, financial advisors can help make sound decisions while balancing [your own] long-term financial security with the emotional need to support other adults in your life," she said.

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Across all generations that supported a parent in the last 12 months, more money is provided to mothers ($13,750) than fathers ($8,500). Adult children received an average $10,000.

Despite the cost to financial supporters, the majority of them are happy they can help. Sixty-four percent are glad to help a parent, and 53 percent say the same about their adult children.

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They also are more likely to think it's acceptable for aging parents to expect to be financially rescued than adult children (35 percent vs. 21 percent). And if forced to choose between the two, they're overwhelmingly more likely to continue supporting the parent than the adult child (83 percent vs. 17 percent).

The bottom line, say experts, is to plan ahead. "If you aren't already in this situation, statistics show that we should all prepare for it," Sadowsky at TD Ameritrade said. "The more you can plan for the unexpected, the better off you'll be in the long run."

—By Sarah O'Brien, special to CNBC.com