Rich Millennials are expecting to bankroll their children’s futures in unprecedented ways — but their generosity comes with strings, according to a new survey.
More than half of millennials — or 56% — say they expect to foot the bill for their children’s college, compared to just 42% of Gen X parents, and just 23% of Baby Boomers. Millennials also expect to pick up the tab for their children’s rent, home purchases, and wedding costs more frequently than earlier generations — expressing an open-wallet policy with their kids even into their 30s and beyond, according to the digital wealth management firm Personal Capital’s Affluent Family Finances Survey,
Still, parents have some serious expectations connected to their largesse. Survey responses show 67% of parents of all ages say they believe their kids should get a job as early as middle or high school, compared to just 12% who say they believe their kids should wait until after college to work.
The study, carried out by ORC International, surveyed 1,001 millennial, Gen X, and Baby Boomer parents in the US with assets of $500,000 and up. The survey distinguishes between “affluent” and “high wealth” parents, who were described as having at least $3 million in investable assets.
Here’s when rich parents think kids should start working
Seventy-one percent of parents surveyed in the Baby Boomer generation think children should start working while in high school, versus 56% of those in Gen X, and 40% of millennial parents.
It’s unclear how many of those kids actually have a job, given that a report based on government surveys of American high school students found the number of teens who had ever earned money from working dropped from 76% in the 1970s to just 55% in 2010.
“Affluent parents, across generations, are feeling increasing pressure from their children to provide longer term support,” Personal Capital CEO Jay Shah said in a statement.
Personal Capital found that 19% of surveyed affluent parents plan to support their kids until they hit 30 and older, and 97% say they’ll leave behind an inheritance, as 91% of those surveyed said that the sum would be at least $100,000.
Why kids aren’t working as much as they used to
While the Personal Capital research didn’t address the specific types of jobs affluent parents want their kids to work, the idea of parents wanting their children to do so at earlier ages reflects the reality that teens in the US aren’t working as much now as in the past.
Bloomberg reported in June of this year that teen employment has plunged since the 1990s, citing data from the Bureau of Labor Statistics.
“When recessions hit, in the early 1990s, early 2000s, and from 2007 to 2009, teen labor participation rates plunge. As the economy recovers, though, teen labor doesn’t bounce back,” Bloomberg reported.
The current projections for teen employment continue to plummet, with the rate of teens working during the peak summer months expected to drop to less than 27% in 2024 — down from almost 70% in 1988 and 1989, Bloomberg reported.
Among the theories on what could be driving down teen employment include: an increasing need for older Americans to hang on to their jobs and an increase in parents crowding kids’ schedules with activities and volunteer work that might look good to colleges.
Other researchers speculated that the drop in teen jobs is linked to today’s teens remaining in a suspended state of extended childhood.
Financial literacy starts at home
It’s possible that part of the divide between kids and self-sufficiency around money stems from parents’ reluctance to let their kids in on honest conversations about cash.
Just half of the affluent parents surveyed report that their kids are aware of their salary, and 47% report that their kids know how much their net worth is.
Parents who have $3 million or more in combined assets are more likely to hide their salary from their kids, the study found.
“The first step is for families to start conversations about family finances and legacy planning,” Shah said.
Ron Lieber, the New York Times “Your Money” Columnist and author of the book “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart about Money,” writes that making financial conversations part of daily life is the best way to get kids — and parents — comfortable with the topic.
“Every conversation about money is also about values. Allowance is also about patience. Giving is about generosity. Work is about perseverance. Negotiating their wants and needs and the difference between the two has a lot to do with thrift and prudence,” Lieber writes.
Parents may not be doing their kids any favors
In the Personal Capital survey, a staggering 70% of parents in the millennial generation say that when it comes to saving up, they would prioritize putting money toward their child’s college schooling instead of their own retirement. And 48% of all parents surveyed agreed.
But financial analysts warn that this kind of generosity is short-sighted, since “this could prove to be a big mistake if these children end up supporting their parents in old age. Remember, you can always borrow for college — you can’t for retirement.”
That makes the following finding even more concerning: A 2016 Personal Capital survey reportedly found that 40% of millennials don’t have even one retirement savings account.