This month, young adults across the nation are donning graduation robes and tweaking resumes, while parents ready their Canons and Kleenex. At the podium, guest speakers will motivate and inspire, but they will likely omit one tiny detail: Many of those grads will remain financially dependent on their parents for years.
According to a new survey, 59% of parents provide financial support to their adult children who are no longer in school. The online poll by ForbesWoman and the National Endowment for Financial Education (NEFE) of 1,074 U.S. adults—non-students aged 18 to 39 and their parents—was conducted by Harris Interactive in May.
"Parents are continuing their involvement longer than we expected," says NEFE chief executive Ted Beck. "Financial pressures are higher for this generation. If I was in their shoes, I would be concerned."
Young adults are feeling the heat: 65% say the financial pressures faced by their generation are tougher than those faced by previous generations, and one in three parents agree that their offspring are worse off.
Today's young adults graduated into one of the worst recessions since the depression and carry a crippling college debt burden. Above the national average of 9%, unemployment rates spike to 14.2% among 20- to 24-year-olds and 10.2% in the 25 to 29 bracket. Meanwhile, the average four-year college student borrowed $24,000 in 2009–double the $12,000 she borrowed in 1993.
"Parents were expecting their kids to get jobs that were high paying enough to manage payments, but they are finding that they can't," says Jean Chatzky, financial editor for the Today show. "You don't want to see your kids struggle."
In fact, among the parents offering financial support 43% say they are "legitimately concerned" for their kids' financial well-being, and 37% say they have struggled and don't want their children to struggle too. Thus, they are providing financial assistance in record numbers and on a scale that ranges from occasional cash to complete dependence. The majority of parental help is housing (50%), living expenses (48%), transportation costs (41%), insurance coverage (35%), spending money (29%) and medical bills (28%).
New York-based psychologist and author of Face It, Vivian Diller, Ph.D., believes the trend extends beyond the economy. "In the last 20 to 30 years, the family structure has become more child-centered," she says. "Boomer parents were very willing to make sacrifices for their kids, giving them the sense that it would continue until they were on their feet. Now parents are supporting kids' lifestyles."
Diller says the trend may bring families closer. Among the young adults living at home, 75% contribute to the household financially—with groceries (52%), utilities (34%), gas for the family car (31%) and rent or mortgage help (29%)—and 42% provided non-financial help like cooking, cleaning or childcare. Those young adults are also expecting to repay their parent's goodwill as they grow older and begin needing more help themselves, says Diller.
However, increasing financial support could have dangerous side effects. "Because they have been protected, some children don't learn reasonable ways to manage money, and they run into trouble," Diller warns. "You can enable kids to become more independent, but you can disable them too."