CALGARY—Canadian parents are supporting their children financially well into adulthood, a new poll by RBC found, and it may be affecting their retirement plans.
The poll found 96 per cent of parents with kids between the ages of 18 and 35 report financially supporting them into adulthood. Forty-eight per cent felt they were “subsidizing” their 30- to 35-year-olds’ lives, and more than a third worried about the impact this spending could have on their retirement savings and planning.
Rick Lowes, vice-president of RBC’s retirement segment, said the results of the poll were a bit of a surprise. He said RBC hears from its clients about supporting their children into adulthood, but “it was a little bit eye-opening to see the extent.”
Lowes said there’s no data to show exactly how much things have changed, but he pointed to increases in housing and post-secondary education costs as reasons parents may be supporting their children later and later in life. “We certainly know that in today’s day and age, there is an increased or large portion of young adults who are continuing to struggle to find steady income,” he said.
He said he thinks it’s likely the trend will continue, and parents of younger children should be planning ahead.
“Their children … are going to be under additional pressure in the future to try and make ends meet,” Lowes said.
The study surveyed 1,004 Canadian parents above the age of 36 who have “millennial” children between the ages of 18 and 35.
Parents estimated an average annual spend of $5,623, the report found. These averages differed significantly between the provinces: Alberta’s average was $4,977, compared to $6,818 in British Columbia, and $6,694 in Ontario.
Parents of children aged 30 to 35 reported spending an average of $3,729 per year. The average in Alberta was $2,668, while in B.C. it was $5,279, and in Ontario, $4,135.
Lowes attributed these differences to the higher living costs in cities such as Toronto and Vancouver, which have seen housing and rental rates grow in recent years.
“Whether it’s rent, whether it’s transit … those markets tend to have a disproportionately high cost of living,” he said. The poll found that parents were chipping in on education and living costs the most, including phone bills.
Reduced government subsidization of education costs, such as the recent changes to Ontario’s student assistance program, could have a further impact in the future, Lowes said.
He recommended that parents of adult children meet with a financial planner to discuss their retirement plans, adding that it could take all of 20 minutes but make a significant difference.
“Many people today have challenges understanding how much they need to save for retirement and when they retire,” he said. “That financial plan will give them a sense.”
For those who want to help loosen the ties between their retirement savings and their children’s living costs, he said the same advice applies.
“I think a lot of people think financial planning is only for those people that are older in life,” Lowes said. “We all can benefit from additional expertise around how we can better manage our finances.”
Rosa Saba is a reporter/photographer with Star Calgary. Follow her on Twitter: @rosajsaba