RBC survey finds: Cost of helping adult kids is about the same as government benefits

Financial aid is welcome, but details paint a dire picture

A starker picture appears when RBC analysts broadened the analysis to include yearly contributions from grandparents, rather than regular or monthly contributions.

Turns out, almost three out of four Canadian grandparents (70%) helped their adult children with costs beyond the basics, every year.

Breaking this help down:

• 39% of grandparents assist with grandchildren's educational expenses
• 30% help with cost of living expenses

But cost of living contributions aren’t the only way grandparents are helping out. The number of adults aged 20 to 34 living with at least one parent jumped from 30.6% in 2001 to 35.1% in 2021, according to Statistics Canada census data.

Empower your investments with Qtrade

Discover Qtrade's award-winning platform and take control of your financial future. With user-friendly tools, expert insights, and low fees, investing has never been easier.

Start Trading Today

Average annual support from grandparents equates to government subsidy

The RBC survey found that the average yearly financial contribution from grandparents was $6,945 to their adult children; the average financial aid to grandkids was $4,002 per year. To put this in perspective, Canadian parents receiving Canada Child Benefit can expect to receive approximately $6,570 in 2024 (an almost 5% increase from the 2023 benefit).

"This can be a financial drain that grandparents haven't included in their budget," explained Bannon. "The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings. For those who are already retired and living on a fixed income, these added expenses can pose an immediate risk."

Impact on retirement

While parents will often go without in order to help their children, the impact of helping adult kids pay bills can be quite significant — particularly when most grandparents live on a fixed income during retirement years.

Almost all grandparents trying to financially help their children and grandchildren worried about the impact on their own financial well-being; however, of those surveyed, 52% of Canadian grandparents confessed they'd have to make significant lifestyle changes in order to continue helping their children and grandchildren.

Looking to the future, almost a third (29%) worried that the current level of financial support they were providing would be insufficient in the next few years — prompting an increase to their after-tax, out-of-pocket aid to their adult children.

Staying on top of financial expenditures is key, especially when it comes to belt tightening at retirement age. With that being said, just over a third of grandparents (34%) were unsure of how much money they’d given to their grandchildren, and 43% didn’t know how much they’d given their adult children. Even more worrying, only 37% had reviewed their finances to see how multi-generational support would affect their retirement plans. Of those that had reviewed their finances, just over half (54%) realize that finding money to help their family would require sacrificing their own savings.

Unexpected vet bills don’t have to break the bank

Life with pets is unpredictable, but there are ways to prepare for the unexpected.

Fetch Insurance offers coverage for treatment of accidents, illnesses, prescriptions drugs, emergency care and more.

Plus, their optional wellness plan covers things like routine vet trips, grooming and training costs, if you want to give your pet the all-star treatment while you protect your bank account.

Get A Quote

Looking for ways to save

RBC recommends that grandparents take a few simple steps to avoid too much overt financial risk.

• Step 1. Discuss finances with your adult kids: Have frequent, open conversations with your adult children about financial expectations as you approach or move through retirement. Help your adult children to budget and forecast better. If you and your kids don't like using spreadsheets, consider using an app to track your budget and spending. For instance, You Need a Budget (YNAB) offers an easy mobile and online platform that lets you track and plan your spending — and offer insight into how to save and spend smartly. Plus, new customers can try YNAB for 34 days, for free.

• Step 2. Talk a financial advisor or money manager: Connect with an advisor to build a financial plan and schedule regular check-ins to stay on track (even if everything is going well). Another option is to build a financial plan that includes a retirement strategy using a no-fee advisor — a professional with financial knowledge that doesn't sell products.

• Step 3. Use and update your budget to keep on top of expenses: Try to anticipate how your future costs might change year to year and month-to-month. (Hint: Have you tried using an app-based budget, like YNAB? If that doesn't interest you, consider a credit card that breaks down your spending by categories. You can find good options through the Money.ca credit card finder tool.

Survey methodology

RBC’s national survey interviewed 1,508 Canadians grandparents with children aged 25 and up. Data was gathered from users on the Angus Reid online forum. RBC defines a Canadian grandparent as someone over the age of 55 with a grandchild or grandchildren.

Sources

1. RBC: Banking on Grandma and Grandpa: Canada's grandparents risk their own financial future to support their adult children and grandchildren (July 27, 2024)

• — with files from Romana King*