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Millennial Parents Are Different

Millennial Parents Are Different

December 06, 2017

I’m a baby boomer. I was born in 1962 during the trailing years of the baby boom and I was raised by parents who can remember the Great Depression (the one from the 1930s, not the one from 2008).
My parents are savers. They saved for most big purchases and they both retired with a teacher’s pension to fund their after-work years. This isn’t the case with most millennials. Millennial spending habits are different, and far fewer are counting on pensions to help them through retirement.
My children are millennials. They’re too young to have kids yet, but the oldest millennials are in their 30s and many have young children. A recent study shows millennial parents in particular are much different from my parents. Personal Capital’s latest online survey of just over 1,000 affluent families - age 18 or older with assets of $500,000 or more - found that millennial parents plan to spend more on their children than any prior generation.

Helping Kids Pay for College

Seventy percent of survey respondents said they favor saving for their child’s college over saving for retirement. It turns out this is a bad idea for a couple reasons:

  • Education can be financed with loans. If you are unable to work, nobody gives you a loan to cover your living expenses.
  • The benefits of education pay out over a lifetime to the student in the form of a more financially rewarding career. That career provides the easiest way to repay the cost of the education. If the investment in schooling won’t return increased compensation, is it really worth it?

Paying Rent and Buying a House

According to the survey, millennial parents are three times more likely to buy a house for their kids. And if they don’t buy it, they are twice as likely to put up the entire down payment. If the kids rent, millennials are more than 2.5 times more likely to cover all of the rent for their kids. The survey results break down like this:

 Millennial ParentsAll Parents Surveyed
Buy a house for their kids:46%14%
Make the down payment for their kids:16%8%
Pay all of the rent for their kids:48%18%

As somebody who has a house payment and is raising teenagers right now, it’s not clear to me if affluent millennials will have the means to cover these costs. But it’s early yet. Most millennials still have a few years before their kids hit these milestones.

This is why it’s so important to have a comprehensive financial plan built with the help of an advisor who is the client’s advocate (a fiduciary advisor) and who only gets paid by the client (a fee-only advisor), not by a financial product manufacturer or other financial organization.
A good financial planner will map out when funds will be needed and how much saving it will take to hit all these goals. They will provide a step-by-step guide to hit each milestone and will empower clients to reach their ultimate financial goals.
If you want a game plan to be sure you can help your kids as much as you wish, contact my office at I am always happy to help people work on all of their financial goals.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.