It's not easy being a young adult. Between entry-level wages and student loans, many younger folks struggle to get ahead, and as such, rely heavily on their parents to help stay afloat.

Such is the habit of a large number of young adults aged 18 through 34. An estimated 70% have received financial support from their parents during the past year, and more than half of adults in their early 30s continue to receive some level of financial support, according to a new report by Merrill Lynch and Age Wave. Furthermore, around 66% of similarly aged adults say they can depend on their parents to help cover their expenses, and 58% admit that they wouldn't manage to afford their current lifestyles without financial support from their parents.

Young woman sitting across from smiling older couple with mugs in front of them


Not surprisingly, 83% of parents who provide financial support to grown kids say that they do so to help their children get ahead. And the same percentage of young adults feel grateful, not guilty, to be on the receiving end of that support.

If you've been in the habit of supporting your adult kids financially, then you should know that you're doing an extremely generous thing. Unfortunately, it might also be an imprudent move that ultimately wrecks any chance you might've had at a secure retirement.

You need that money more than your kids do

It's one thing to provide financial support to your adult children if doing so doesn't compromise your own future. But if your savings are mediocre at best, then the money you give to your adult children on a regular basis should instead start going directly into your retirement account.

Imagine you support your adult kids to the tune of $500 a month over a 15-year period. If you were to save that money in an IRA or 401(k) instead, and invest it at an average annual 7% return, you'd have an extra $150,000 for your golden years. That's a lot of income to give up later in life.

Remember, while you'll likely have some income from Social Security to look forward to in retirement, those benefits will only cover a small portion of your bills. The rest of your expenses will require some serious savings, which means that unless you're rolling in money, you probably can't afford to be giving your grown kids the support they've been getting.

But that doesn't mean you can't support your young adult kids in other ways. For example, if you have a recent college grad, you might allow him or her to move back home and live rent-free for a year or two. Doing so won't necessarily impede you from saving for retirement, but it will allow your child to save money that can be used to pay down student debt, build an emergency fund, or serve as a home down payment.

Another way to help your grown kids out? Help ease the burden of child care. If your work schedule is flexible, offer to pick up your grandkids after school so your own children save on babysitting. There are plenty of ways you can be generous without risking your future, so start getting back in the habit of putting your own needs first. Your retirement pretty much depends on it.