The Bank of Mom & Dad: Is It Affecting Your Retirement Planning Strategies?

Raising a child isn’t cheap.

In fact, research shows that Canadians spend almost $250,000 on their children up to the age of 18.

While this is a financial responsibility that all parents must accept, the harsh reality is that there is a growing trend for young adults to rely on the bank of mom and dad well into their 20s and 30s.

As a loving parent, you’d do anything to support your son or daughter.

Unfortunately, it could cause major damage to your own retirement planning.

Now is the time to regain control of the situation once and for all.

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A Generational Problem

If you’re a parent currently feeling the financial strain of having grown-up children, you are not alone.

In fact, two-in-three Canadian parents are in the same boat, which signals a far higher percentage than any previous generation.

Millennials and Gen Z face significant financial difficulties.

Whether it’s repaying student debts, trying to find affordable housing, or holding down a job in a challenging market, a large percentage of young adults lean on the bank of mom and dad.

In fact, over one-in-three young homeowners need financial support in the form of downpayment boosts or help with mortgage repayments.

While it’s not entirely their fault for being dealt a generational bad hand.

Nonetheless, neither parents nor young adults can ignore their need to take accountability.

Not least for your financial wellbeing.

How The Bank Of Mom & Dad Affects You

By age 50, one-in-two Canadians has saved less than one-quarter of what will be needed to fund their retirement.

If you fail to close the retirement savings gap over the next few years, you will face a wide range of problems, such as:


  • Feel the need to downsize property.
  • Cut back on living expenses during retirement.
  • Delay your retirement plans for a few years.
  • Relinquish assets that would have been your estate.
  • Endure a significant reduction in life quality.


Worst of all, your continued problems are likely to put strain on your relationship with the kids.

While there’s nothing wrong with treating your grown-up kids from time to time, closing the door on the bank of mom and dad is essential.

But how?

The Solution

Whether you’re in debt or struggling to grow your RRSP account, you must sit down with the kids to explain that it is no longer possible to provide significant financial help.

You’ll still be there to provide guidance and may be able to offer a small short-term loan from time to time, but the days of funding their lifestyles are dead.

The key is to help your child become more responsible with money.

There are several ways to do this, such as:


  • Sit down together and analyze their expenses, before identifying any that can be reduced or lost.
  • Using a budget calculator to work out how much they have to spend.
  • Encouraging them to use automated payments so that their bills are paid on pay day, avoiding late fees.
  • Telling them to stop buying you expensive birthday gifts, and put the money into their savings account.


Further support can be offered in the form of helping them prepare for job applications and other steps that can boost their career.

Ultimately, instead of supporting them with money, use this new chapter as a chance to help them help themselves.

If you need more advice for their financial future, or your retirement savings, call the BankruptcyCanada team today.

Information on Consumer Proposals

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