The Growing Trend of Parent-Child Dependency
04/09/2024
In previous generations, claiming children under 18 as dependents for income tax purposes was a given. In today's world, a growing number of adults claim adult children as dependents. Even more surprising are the number of adult children who claim their parents as dependents.
In a collaborative effort this March, Caring.com and Pollfish conducted a comprehensive survey among 4,000 American adults aged 25 or older. The goal was to shed light on the financial challenges faced by families providing for senior parents amidst escalating living costs.
The results of the "2024 Senior Financial Dependency Study" have just been released. It reveals some startling facts:
- When asked why they financially support their parents, more than 4 out of 10 American adults cite insufficient income due to the rising cost of living.
- Over half of those who claimed their parents as dependents on their taxes started claiming them in the past two years, 2022-2023.
- 3 out of 4 adults who claim their parents on their taxes are also financially responsible for one or more children, joining what is known as the “sandwich generation.”
- 4 out of 10 “sandwich generation” parents say they financially support their adult children because they are unemployed.
“As the Baby Boomer generation continues to age, we see how stretched thin the sandwich generation truly is,” says John Farrell, Director of Financial Planning and Analysis at Caring.com. “Add to this recent economic shocks, growing income disparity and a tight labor market, and you have a perfect recipe for a caregiver crisis. We talk with caregivers every day who are trying to hold down a job, provide for their children, and care for their aging parents at the same time.”
According to the above-referenced survey, of all those who claimed their parents on their taxes, more than 50 percent started doing so in the last two years. Among adults with senior parents who are claiming them on their taxes, 3 out of 4 have at least one parent living with them in their family home.
When asked what the primary reasons were for their parents’ financial dependency, 4 out of 10 say they are financially supporting their parents because their parents’ savings, investments and income, including Social Security payments, are insufficient to cover the current cost of living.
I know Boomers who routinely have to step in and care for their elderly parents themselves or help arrange for their care. At the same time, many of these Boomers are aging and dealing with their own health issues. It is also not unusual for younger Boomers in particular to provide support to their adult children -- even to the extent of having those children return home to live with them due to financial hardship.
Parent-child dependency is a growing trend. It demonstrates the real need for family members to shift their perspective on typical relationships. Adults might not anticipate that their parents or adult children would ever become dependent on them, but that is apparently becoming more common. It could suggest a dramatic change in American society.
Image from Agewithoutlimits.org
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