Young Americans are having trouble becoming fully independent adults. Millennials, who were long ridiculed for being boomerang kids who scurried back to mom and dad’s basement after leaving the security blanket of college, know a thing or two about that.
But the failure to launch trend is continuing with Gen Z, the latest cohort of 20-somethings taking out cash from the Bank of Mom and Dad. Over half of the adults in the generation reported that they don’t pay for their own housing, according to a 2024 Bank of America study. In fact, parents of adult Gen Zers expect to give their children $1,813 a month in 2025, based on a March report by Savings.com. It’s the highest level in three years and includes expenses for groceries, cell phones, rent and utility bills.
This behavior is not merely on account of arrested development. There are many factors at play, including the uncertainty around AI and long-term employment prospects for entry-level jobs. It’s a reality that raises a major question for current and prospective parents: Can you financially subsidize an adult child for the long-term?
The cost of raising a child to 18 continues to rise and result in eye-watering predictions. Families spend an estimated average of $26,000 annually on kids, which would equate to a total of $468,000, according to recent analysis from SmartAsset. Those in high cost-of-living areas or places with a scarcity issue for childcare pay even more. The average price tag of raising a child in Boston per year was estimated to be just under $40,000 in 2025, for example.
But this fixation on just getting a kid to 18 is such a narrow scope. According to Sallie Mae’s annual “How America Pays for College” report that analyzed undergraduate data, parents helped their child pay for nearly 50% of college — a milestone that often lasts for more than the stereotypical four years — in 2024. Seven years ago, the company found that parents helped cover 31% of the cost.
The average price of tuition and fees for a public four-year in-state college is $11,610 for the 2024-2025 school year. Out-of-state schools cost nearly three times as much. Private nonprofit four-year colleges came with the highest price tag of $43,350.
After that life marker is passed, then the conversation of grad school — which costs an average of around $43,000 a year — might come. While parents tend to cover this added expense less often, over the years articles, advice columns, social media posts and discussion boards have explored some version of this question: “Should parents pay for graduate school too?” Whatever families’ answers are, the expectation, at least, seems to be growing. And that’s despite the fact that grad school itself may not be the answer to most young people’s career woes.
Keep in mind that this is what things cost currently. It’s hard to imagine how much college will be for Gen Alpha. Looking at the last decade certainly doesn’t paint an optimistic picture. The cost of a private nonprofit four-year degree was roughly $13,000 more in the 2024-2025 school year than a decade prior. Approximately $1,300 a year might not sound like much, but it represents a nearly 39% increase in a decade. The average public, four-year in-state school tuition has risen 27% over the same time period. Of course, generative AI could completely change the landscape of higher education before they get there. Trade and vocational schools could see increased enrollment as traditionally white-collar jobs lean more on technology.
New grads are already at the forefront of seeing what it’s like when a machine can take over entry-level (or higher) jobs. The unemployment rate for them hit 5.8% in March, which was a four-year high, according to the New York Federal Reserve. The other concern is underemployment, which is defined by the New York Federal Reserve as graduates working in jobs that typically do not require a college degree. A significant number of Gen Zers, 41.2%, are in this position.
It’s the making of the same conditions — recession woes and a tough job market post-The Great Recession — that kept millennials financially tethered to their parents well into adulthood and earned them criticism for draining their parents’ retirement funds. Newer moms and dads might need to account for this.
Americans believe they need $1.26 million in order to retire comfortably, according to a 2025 Northwestern Mutual study. And yet, just over half think it is somewhat or very likely that they’ll outlive their retirement savings, with 40% of boomers and 56% of Gen X reporting to have the concern.
The gulf between what is needed to live a comfortable life and current retirement assets is wide. Boomers aged 61 to 79 have an average 401(k) balance of $249,300 and average IRA balance of $257,002, based on Fidelity Q4 2024 data. Gen Xers have an average 401(k) balance of $192,300 and an average IRA balance of $103,592. Of course, members of both generations may be drawing down on their accounts already subsidizing with Social Security or accessing pension funds in addition to these retirement accounts.
It’s a reminder that millennial and Gen Z parents of young children might need to structure their finances with long-term flexibility in mind. While the often-frustrating advice to “figure it out as you go” holds some truth, too many moms and dads might be looking at their bundles of joy and rarely calculating the what ifs beyond the ages of 18 or 22. In reality, they should be bracing to keep the wallet open well into their child’s adulthood, which may bring the possibility of delaying retirement.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Erin Lowry
