The financial burden of supporting multiple generations is increasing for those in their 40s and 50s, endangering their efforts to build retirement wealth. Increasingly, the financial pressure is coming from adult children.
Rising college costs and the declining employment outlook are making it a challenge for young adults to leave the nest. According to a recent Pew Research Center analysis of U.S. Census Bureau data, 36 percent of millennials, defined as adults ages 18 to 31, were living in their parents' home in 2012. That's the highest percentage in 40 years. Prior to the recession, 32 percent of millennials were in such an arrangement.
For those attempting to build wealth for retirement, the burdens of supporting their children as well as their own aging parents has become a major financial concern. A Pew survey published in January highlights the financial strains on this so-called "sandwich generation."
Nearly half (47 percent) of adults in their 40s and 50s have a parent age 65 or older, and are either rearing a young child or monetarily supporting a grown child, according to the Pew survey. Approximately 15 percent of them are providing financial support to both parent and child.
More affluent adults, those with annual household incomes of $100,000 or more, are shouldering the financial burdens. Forty-three percent of the affluent have a living parent age 65 or older and a dependent child, compared with 25 percent of those earning between $30,000 and $100,000 annually.
But even among the affluent, the ability to save while supporting two generations appears to be a challenge. Only 28 percent of respondents say they live comfortably within their financial situation, while 30 percent say they can meet basic expenses with just a little left over. Another 30 percent can only meet basic expenses and 11 percent say they can't even do that.
Are you stuck in the middle financially and, if so, how are you dealing with it?
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