The older generation is putting its retirement at risk by helping out younger family members, rather than younger family members financially assisting older ones. And that's eating into retirement money.
The Employee Benefit Research Institute (EBRI) has found that money is overwhelmingly flowing from older people to younger, instead of younger adult family members taking on any financial burdens for the older folks
"For the older households, cash transfers can reduce their retirement assets, raising concerns about retirement security particularly for low-income groups," Sudipto Banerjee, EBRI research associate and author of the report, said in a statement.
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Banerjee continued, "Although cash transfers are more prevalent in high-income households, a significant percentage of low- and middle- income households transfer cash as well."
The research shows that, from 1998 through 2010, money has increasingly been transferred from over-50 households to younger family members. Just 4–5 percent of older households have been the beneficiaries of cash transfers from family members, compared with 38–45 percent of older households providing funds to younger family members.
In addition, the amounts are very different, with younger folks receiving far more money than older ones. And while the amounts older folks have given to their kids and grandkids have generally decreased as they age, the difference in dollar amounts is striking.
During a two-year period between 2008 and 2010, the average amounts transferred by households between ages 50–64 and households ages 85 or above were $8,350 and $4,787 respectively. During that same two-year period, however, households ages 85 or above got the largest average transfers among all age groups, but the average amount was just $359.
And, not surprisingly, higher-income households are much more likely to provide money to family members. Among the older households that give money to younger generations, income is higher than among households that don't (and that perhaps should be on the receiving end, instead).
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