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Young adult children have spent years relying on funding from the Bank of Mom and Dad, and now their parents say they may soon need to mooch off of them.
Members of Generation X, currently in their 40s and 50s, are finding themselves “critically underprepared” for retirement, and they’re counting on financial and housing support from their families, according to Prudential Financial Inc.’s “2024 Pulse of the American Retiree Survey.” The report says this could spark the “rise of the silver squatters.”
Just a decade until retirement eligible, 55-year-old Americans have less than $50,000 in retirement savings, the report finds. Two-thirds of 55-year-olds fear outliving their savings, and researchers say they’re in the midst of a “midlife retirement crisis” as they realize they haven’t saved nearly enough.
This is the “first modern generation confronting retirement without defined benefit pensions or full societal security benefits,” the report notes. “Millennial and Gen Z adults who have counted on parental support will soon be paying their dues.”
Nearly a quarter of 55-year-olds expect to need financial support from family in retirement—twice as many as current 65- and 75-year-olds do. One in five (21%) also expect to need housing support.
However, this need for retirement help is largely going unspoken. Nearly half of 55-year-olds who expect to need support have not yet discussed it with their family.
The Rise of Multigenerational Housing
Inflation, higher living costs, rising homeownership expenses and the demise of pension plans (which largely supported previous generations) are hampering households’ ability to financially prepare for retirement.
Not to mention, “Gen X was hard hit by the global financial crisis as they likely purchased their first home during the boom years and may have been underwater in their property or lost their property to a distressed sale,” says Jessica Lautz, NAR’s deputy chief economist. “However, we have seen Gen Xers are boomeranging back financially and in the housing market.”
They’re often in need of larger homes: They are the most likely to purchase a multigenerational home—with nearly 20% of Gen Xers purchasing one, Lautz says. “They have now found themselves as the ‘sandwich generation,’ needing to find room for older adult relatives, children over the age of 18 and sometimes children under the age of 18. In some scenarios, they may financially help as multiple income earners contribute to household expenses. However, in other scenarios, all individuals may be reliant on these Gen Xers financially.”
About a third within the “sandwich generation” says caregiving responsibilities have prevented them from buying a home, or for those who do own one, it’s prevented them from being able to pay off their mortgage, according to a study from realtor.com®. However, for others, the caregiving situation may be improving their financial situation.
“Affordability is still a big challenge in the current housing market, but for the Sandwich Generation, family support is providing a helping hand when it comes to finances,” says Laura Eddy, vice president of research and insight for realtor.com®. “Over half of adults within the Sandwich Generation who receive financial support from family members report that this support is helping them to afford a home, while a little less than half (47%) said the support helped them save for retirement.”
For now, baby boomers are mostly the focus as they’re currently facing retirement; about 11,000 65-year-olds enter retirement every day, the Prudential report notes. “But we must also focus as an industry on the opportunity to help a slightly younger generation of workers enter the critical 10-year countdown to retirement,” says Caroline Feeney, CEO of Prudential’s U.S. Businesses. “The financial futures of certain cohorts—such as women—are especially precarious. The upside is that, with the right planning and strategy to protect their life’s work, we can ensure this generation is well-prepared to live not only longer, but better.”