A recent Credit Karma survey revealed that close to 33% of American parents with children older than 18 continue to pay their kids’ way.

More than two-thirds of parents are allowing their 20- and 30-year-old children to live at home amid a challenging economy in which the cost of living has soared, including rents.

Other parents are paying cell phone bills, making car payments, and buying groceries for their adult children. Not surprisingly, this added financial burden is taking a toll, with 59% of parents saying it’s causing them mental stress.

The reason they continue to do so, according to the report, is because they feel empathy and a sense of accountability for their kids’ financial security.

While these emotions might be normal, they could cause more harm than good. Parents say the bank of mom and dad is running dry, sending some families deeper into debt and causing others to delay retirement.

“There’s nothing wrong with providing financial support to your adult children if they’re in need, but if it begins to hurt your own finances, it is probably time to set some guardrails,” stated Courtney Alev, consumer financial advocate at Credit Karma.

There’s plenty of evidence this is already happening, especially as more parents work past retirement age.

Parental pain

The parents who keep bailing out their kids are paying a high price for it.

The Credit Karma survey showed that 34% of parents who are still giving their adult children handouts are taking on more debt to do so, while nearly 30% are dipping into their retirement savings or delaying retirement altogether.

Worse, some parents who are footing the bill for their grown kids are struggling to make their ends meet, including paying for groceries, rent, and even the light bill.

A Pew Research poll found that nearly 20% of Americans who have reached retirement age were still working as of 2023, which is almost twice the amount from three and a half decades ago.

This figure is likely to grow in the coming years, given that 49% of American adults ages 55 to 66 have no retirement savings at all, according to Census Bureau data.

Teresa Bailey, a certified financial planner in Nashville, explained the psychology behind what some researchers call “snowplow parenting,” telling USA Today: “They feel like the economy is different now, and the world is different, and it’s more difficult for somebody to be fully financially independent.”

Parents have every reason to feel guilty about the plight of their children. Many young adults today are saddled with record student loan debt and unaffordable housing.

As a result, many are postponing major life events like marriage or having kids of their own, leaving full-fledged adulthood hanging in the balance.

Unfortunately, there doesn’t seem to be any quick fix on the horizon.

Waiting for the next shoe to drop

If parents are waiting for economic conditions to improve before they insist that their grown children become financially independent, it could be a while.

Whispers among economists about a potential recession in mid-2024 have emerged, adding to the uncertainty that has been pressuring American households of late.

Meanwhile, those young adults who are earning a decent paycheck are directing most of it toward paying for basic expenses, like rent, instead of savings.

One 32-year-old professional who still lives with her parents told NBC News: “We’re the generations that got stuck between a rock and a hard place,” about the pair of recessions that her generation has witnessed along with a pandemic and the student loan crisis.

She added: “[We] want to enjoy our lives, but we’re always waiting for the shoe to drop.”

With the cost of living set to increase in 2024, parents might have to have some difficult conversations with their adult children about financial independence sooner rather than later.