Though the data on private student loans ismore difficult to assess, what we know about Parent PLUS Loans isstaggering — currently, 3.6 million parents owe $88.9billion.  Are they saving for retirement? (Photo:Shutterstock)

Some of your employees may be supporting their grownchildren instead of saving for retirement.

Yes, you read that right.

According to a report by Merrill Lynch and Age Wave, U.S.parents spend $500 billion a year on their 18- to 34-year-old adultchildren – twice the amount they contribute to their retirementsavings.

Seventy percent of adults between the ages of 18 and 34 receivedsome sort of parental financial support in the last year, with overhalf of those between the ages of 30 and 34, the report states.

This is especially alarming because almost 25 percent of U.S.adults don't have any retirement savings or pension, and 64 percentof U.S. adults know they aren't adequately preparing forretirement, according to the 2018 Report on the Economic Well-Being of U.S.Households.

Parents supporting millennial children

The Merrill Lynch and Age Wave report found that 58 percent ofmillennials acknowledge that they could not afford their currentlifestyle without the financial support of their parents. Anothersurvey by CreditLoan shows that 87 percent of this age group havebeen broke in the past year.

What are parents paying for? The report shows that they aren'tjust helping their grown children with emergencies. They arecovering:

●     Food/groceries: 60percent

●     Cell phone: 54percent

●     Car expenses: 47percent

●     Education: 44percent

●     Vacations: 44percent

●     Rent/mortgage: 36percent

●     Student loans: 27percent

Enormous student loan debt

In addition to helping their children as adults, parents ofmillennials may have also taken out Parent PLUS government loans orprivate loans to pay tuition when their kids were in college.

Though the data on private loans is more difficult to assess,what we know about Parent PLUS Loans is staggering. Currently, 3.6million parents owe $88.9 billion.

What does this mean for parents?

Most millennial parents are 55 or older and should be slowingdown and preparing for retirement. However, in 2018, theBureau of Labor Statistics shows that those over the age of 55 madeup almost half of the new hires for job gains that year.

What's the reason for such a large number of new hires for thisage group? A recent Bankrate report shows that almost halfhave used retirement funds in order to help theirchildren. To make up this new deficit, many parents plan to workbeyond their retirement years.

The problem is that although the sentiment is good, the plan isnot. Working beyond retirement may not be practical. Keepin mind that older adults:

●     Have more illnessesthat could require them to stop working before making up theretirement fund deficit.

●     May need to stopworking in order to care for an elderly spouse.

●     May no longer have theskills needed to work in their current occupation, leading them totake other jobs at lower wages.

●     Have less time to makeup the missing retirement funds.

●     Must begin takingmoney out of retirement funds by age 70.5.

Even though the Age Wave study shows that 82 percent ofmillennials say they plan to help their parents in retirement ifneeded, experts say that parents should focus on their own needsbefore helping out their adult children.

How employer financial wellness programs help

Financial wellness programs can help employeesmake appropriate decisions about their finances and retirement tohelp them stay on track. For example, they can learn how to:

●     Convert parent loansto another recipient

●     Refinance studentloans to take advantage of good credit and lower interest

●     rates

●     Find loans,scholarships, grants, and programs that can help theirmillennial

●     child without dippinginto their retirement fund

●     Determine the effectof removing money from a 401K or IRA before making

●     that decision

●     Create a plan thatallows them to remain financially sound while helping theirchildren

By providing a financial wellness program, employers can helptheir employees nearing retirement make good decisions and helpmillennial employees get on a path to fiscal responsibility.

Kris Alban is executive vice president ofiGrad, a San Diego-based company that provides interactive,personalized financial wellness solutions to employers, financialinstitutions, colleges and universities. Its Enrich platform isused by more than 300 employers, banks and credit unions.

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