Parents Spend Billions On Adult Children, Helping With Groceries And Bills

From Ashton Kutcher to Bill Gates, there's a growing list of notable figures who say they will not be leaving an inheritance for their children.

For the average American, there might not be much to leave behind when faced with the choice between supporting adult children or saving for retirement.

Parents are choosing to cover the costs of groceries, rent and cellphone bills for their adult kids.

A recent study from Merrill Lynch found that 79 percent of parents continue to serve as the "family bank" for their grown-up children, paying for big-ticket items like college and weddings, but also for smaller, everyday expenses. Parents of adult children contribute $500 billion annually -- twice the amount that they invest in their own retirement accounts.

Sixty-three percent of parents said in the study they have sacrificed their financial security for the sake of their children.

According to the U.S. Census Bureau, 34.1 percent of people aged 18 to 34 lived under their parents' roof in 2015. That's up from 26 percent in 2005. One in four young people living in their parents' home neither go to school nor work.

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Denver tax and estate planning attorney Denise Hoffman White worries that propping up adult kids today hurts them tomorrow.

"You start to see adult children who are not being put in a position where they can be successful in their own right because they have a crutch which is different than an opportunity," said Hoffman White, who tries to train clients who are parents to talk to their kids about money the same way they teach manners or good grades.

Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America Merrill Lynch, noted another possible outcome of supporting adult children.

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"If you get to a point where truly your retirement savings or savings just in general is completely depleted to support your kids, ultimately your kids may actually have to provide financial support for you later on in life as well," she said.

"You want to give … but sometimes giving them isn't actually helping them," said Gary Cooper, a private wealth adviser at UBS Financial Services. "Our job is to help them, not do for them, right?"

The Coopers try to teach life-long lessons in budgeting and money discipline with things as simple as a box of Oreos.

"You're welcome to eat them all tonight or you can allot them out and learn to make them last until the next time we go buy the next box of Oreos," said Sandy Cooper.

"It's a concept of saving, of budgeting, of understanding -- that feeling of delayed gratification."