Many parents of millennials (ages 25 to 34) are financially supporting their adult kids, paying some or all of their monthly expenses, including groceries, cell phone, and even costs related to owning a car.
These parents are also paying for bigger ticket items, such as making rent and mortgage payments and paying down student loans. Roughly a quarter of millennials say they receive financial support from their parents in these areas, with 13% saying their parents pay all of their rent or mortgage. And 10% of millennials say their parents are shouldering the cost of their student loans.
That's according to a recent report by Merrill Lynch and Age Wave, which surveyed over 2,700 Americans. Merrill provided CNBC Make It with data that specifically highlights the parental support provided to millennials ages 25 to 34.
"On the path to financial independence, the vast majority of early adults are still relying on the family bank for support," says Ken Dychtwald, a psychologist and CEO and founder of Age Wave.
The report found that 58% of early adults, which Merrill defines as those between the ages 18 and 34, say they would not be able to afford their current lifestyles without parental support.
Why many millennials are relying on parents
Millennials carry more debt than previous generations did at their age, which is causing them to seek out financial help. One major reason is student loans. The number of households with student loan debt doubled from 1998 to 2016, Pew Research Center found. The median amount of loan debt millennials carried was $19,000, significantly higher than Gen-Xers' balance of $12,800 at the same age.
But it's not the only factor. Middle class life is now 30% more expensive than it was 20 years ago, according to Alissa Quart, executive director of the Economic Hardship Reporting Project and author of the book, "Squeezed: Why Our Families Can't Afford America."
"It's a mistake to assume that 'oh, I was once a young person so I understand it,'" Dychtwald says. Older generations didn't face the same challenges as today's millennials, he says.
Still, all Americans, regardless of age, are feeling the squeeze. Salaries just don't go as far as they once did to cover the necessities. In fact, the average paycheck has the same purchasing power it did 40 years ago, Pew Research found. That means it takes more money now to buy the same things.
The 'family bank' should not be a long term solution
It's no surprise that so many parents are still helping out their adult children. Other surveys have come to similar conclusions, and a recent Bankrate report found that about half of parents say they've risked their retirement savings to help out their kids.
Yet financial experts urge caution. While parents may have good intentions when they plan to help kids afford college and other costs, doing so at the expense of your retirement is a mistake.
Opting to under-fund your retirement and planning to work indefinitely to make up the deficit is just not a practical strategy, experts say. Especially when you consider that a majority of Americans say they already plan to need to work long after the age of 65 "out of financial necessity," according to Pew Charitable Trusts.
Focus on yourself first, says Mark Beaver, a financial advisor in Dublin, Ohio: "There's a reason on an airplane they say to put on your own oxygen mask before helping a child." Make sure you are on track with your emergency fund and that you're putting money away for retirement before helping your children.
That's because you can use a number of different loans, scholarships and grants to pay for college, for example, or get a mortgage to buy a house. "Consider the fact that there's pretty much financing available for most life decisions, except retirement," says Las Vegas-based financial planner Luis Rosa.
Millennials want to be financially independent
Millennials recognize that relying on their parents is not ideal. While people may talk about how millennials are "slackers" and how they love living off their parents, that's simply not true, Dychtwald says.
"These people really want to make something of themselves, they want to be financially independent," Dychtwald says. Yet the burden of student loans, credit card debt and the incredibly high cost of housing hamper their timeline.
When they can, however, early adults are working to repay the support. While 26% of those ages 18 to 34 say they moved back home for a time, 54% say they make some contribution to rent or household expenses, Merrill found.
Many also say they intend to help their parents financially down the road in return. Merrill's survey found that 82% of those ages 18 to 34 say it's their responsibility to let their parents move into their home if the need arises.
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