Parents are stepping in to help their adult children when they’re in a financial pinch, but many are sacrificing their own savings in the process.

Over two-thirds (68 percent) of parents of adult children have made or are currently making a financial sacrifice to help their kids financially, according to a new Bankrate survey. Parents say they sacrificed retirement savings (43 percent), emergency savings (51 percent), paying down their own debt (49 percent), or reaching a financial milestone (55 percent).

Younger generations, such as Gen Z (ages 18-26), are graduating college and starting their careers in a tumultuous period of inflation and rising interest rates. Gen Z believes young adults should begin to pay bills later in life than older generations do, but they may be putting off financial independence as a result. However, helping adult children too much in the short term can harm parents’ long-term retirement or savings plans.

Parents are sacrificing their financial stability to help their adult children

Nearly 1 in 3 parents (31 percent) have made a significant financial sacrifice to help their adult children financially.

More than half (57 percent) of all U.S. adults already wouldn’t pay for a $1,000 emergency expense from their savings, according to January 2023 Bankrate data. Now, just over half (51 percent) of parents of adult children say they have sacrificed their emergency savings to help their kids — 20 percent saying it was a significant sacrifice.

Parents have also sacrificed paying down debt, their retirement savings, or some other financial milestone:

Men are significantly more likely than women to feel they sacrificed their debt payoff efforts (53 percent compared to 46 percent, respectively) and some other financial milestone (58 percent compared to 52 percent) to help their adult children. However, men and women were tied when it came to sacrificing retirement savings (43 percent each) and close on emergency savings (53 percent compared to 50 percent).

Though different regions of the U.S. tend to vary financially, according to the U.S. Census Bureau, location played less of an impact on parental sacrifices. The only exception was in the Midwest, where far fewer parents feel they sacrificed for their adult children: Only 38 percent of Midwestern parents of adult children feel they sacrificed their retirement savings for their children, compared to 46 percent of Southern parents, 45 percent of Northeastern parents and 39 percent of Western parents.

Parents may naturally want to help their children when they’re in a financial bind, but Bankrate Senior Industry Analyst Ted Rossman advises against making it a habit.

“(Paying for your child’s bills) can enable bad behavior or stunt an adult child’s development,” Rossman said. “It can also put your own retirement and other financial goals at risk. You can get loans for a lot of things, but retirement isn’t one of them.”

Lower income households are more likely to sacrifice emergency savings to help their adult children

In households with an income under $50,000, 58 percent say they sacrificed their emergency savings for their children, compared to 46 percent of parents with a household income of $100,000 or more.

Those two income brackets are closer in other financial sacrifices they’ve made for their adult children:

• Retirement savings: 45% of parents with a household income under $50,000 a year, compared to 41% of parents with a household income of $100,000 a year or more.
• Paying down debt: 50% of parents with a household income under $50,000 a year, compared to 49% of parents who make $100,000 a year or more.
• Some other financial milestone: 58% of parents with a household income under $50,000 a year, compared to 53% of parents who make $100,000 a year or more.

Baby boomers expect financial independence earlier than Gen Z does

Most adults will need to begin paying their own bills eventually, but not everyone agrees on when that is. Older generations believe people should begin independently paying their bills far earlier than younger generations, according to Bankrate.

On average, American adults believe people should begin paying their own bills starting at 20 years old for their car payment, car insurance, cell phone bill, subscription services, and credit card bills — the youngest average ages for bill payments. They also believe people should pay both their own health insurance and student loans starting at 23 years old on average — the oldest average ages for bill payments.

Baby boomers (ages 59-77) and Gen Zers have the starkest difference between ideal ages: On average, baby boomers believe adults should begin to independently pay for various bills around one to three years sooner than Gen Zers do.

While Gen Zers believe people should begin paying for their car payment at 22 years old, for example, baby boomers believe they should begin paying at 20 years old. Gen Zers and baby boomers also highly disagree on car insurance (22 years old on average versus 19 years old on average) and cell phone bills (21 years old on average versus 19 years old on average).

Men and women are similarly unaligned on when people should begin paying their own bills. Men, on average, say people should begin to pay their own bills around six to 12 months younger than women do. Notably, men believe people should begin paying their student loans themselves at 23 years old, while women say 24 years old.

Additionally, Midwesterners generally believe people should pay for their own bills at the same age or younger than those in most other U.S. regions. Midwesterners believe people should begin paying their car insurance, for example, at 19 years old, while those in the Northeast believe people should begin paying at 21 years old.

3 tips to help your adult children become financially independent

1. Align your budget with your partner. “If you want to give financial assistance to your adult children, make sure you and your spouse are in agreement and have run the numbers to make sure the assistance works within your budget,” Rossman said. Consider how it may be realistic to help your children without dipping into retirement savings or other emergency funds. Adding your child’s bills on a family plan, often available with subscriptions or cell phone bills, can help them financially without making a significant financial sacrifice.
2. Set expectations with your children. If you do want to help your children financially, Rossman advises giving only a specific dollar amount or funds within a set timeframe. “Be clear about the parameters [around financial assistance] with your adult children as well,” Rossman said. “Helping out shouldn’t be seen as a blank check or an indefinite handout.”
3. Have the conversation sooner rather than later. Having a conversation about financial independence with your children before you stop paying their bills can help avoid resentment from both you and your children. Tell your child if you only plan to pay their cell phone bill until they’re 21 to give them time to prepare to pay for it themselves. Financial independence can bring the thrill of adulthood and can set them up for success later in life — show your child what you’ve learned in your own life about finances and give them the space to learn the rest.