Many Canadian Millennials and Gen Zers face strong headwinds when they try to flee their family coops – sky-high rents and housing prices along with a soaring cost of living are sending them flocking back to the nest for support. 

And despite what you might hear on social media, Boomers are doing far more than nagging their prodigal progeny about splurgy avocado toast and fancy coffee orders. According to a new RBC survey, 32 per cent of parents report that their children aged 18 to 40 are not yet financially independent and need to draw on support from the family bank.

The September poll, which surveyed 1,000 Canadian parents with children aged 18 to 40,  shows that financial support continues even as their children age: nearly one in five (19 percent) parents said they are even supporting children aged 35 to 40 and 21 per cent for ages 30 to 34. Plus, they’re forking over significant sums – an average of $6,000 last year per adult child – and helping their children with a variety of expenses, including groceries (56 per cent), unexpected or emergency expenses (43 per cent), rent (24 per cent) and utilities (21 per cent).

This lack of independence isn’t entirely owing to the younger generation’s refusal to scrimp and save like their Boomer parents – who grew up under the cultural shadow of their Depression-era and wartime forebearers. Instead, it’s also largely due to macroeconomic shifts. For instance, in addition to rising costs on everything from groceries to housing, younger generations have up to 86 per cent less purchasing power than their parents. And for younger people looking to buy a home in major housing markets like Ontario and B.C., prices often exceed 11 to 13 times their average salary, a far cry from the roughly two to three times that it was during their parents’ times. 

Regardless of where the blame lies, parents who support children are certainly feeling the pinch. According to a survey by Bloom Finance Co. Ltd conducted last year, 76 per cent of parents and grandparents who provide financial support to children or grandchildren indicated that it was cutting into their retirement savings. This figure increased by 11 percent over the previous year.

So what should parents do when their children start struggling in today’s scary economic climate? ManuLife Financial adviser, Leanne Kohtala – who spoke with Zoomer for a recent story How to Set Boundaries When Supporting Your Children Financially – cautions against rushing to help. Instead, she recommends that parents perform a “stress test on their retirement plan to see how much a depletion of their capital can occur before gifting or lending to their children without causing permanent, irreversible damage to their nest egg.” 

After all, having lived through skyrocketing mortgage rates in the ’80s and various recessions, Boomers understand that sometimes the best remedy for a volatile economic situation is adaptation. “Parents confuse giving money with giving love,” Kohtala adds. “We try to stress to clients in this situation that not providing financial assistance to their adult child can also be a loving act.”

As for those situations where parents can afford to help, she recommends a very business-like approach. “While it might be awkward to request that your son sign an official promissory note, we are recommending that you insist on payment being made to you right out of the gate,” she says. “Collect post-dated cheques. Provide a loan-amortization chart. This clearly shows that this is official business, repayment is expected, and you can chart your progress.”