More than 50% of Canadian parents financially support their adult children, says RBC report

About 18 per cent of parents gave their adult children (aged 18 to 40) between $10,000 and $19,999 over the past year. Photo by Getty Images/iStockphoto

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More than half of Canadian parents provided financial support to their adult children over the past year, giving an average of $6,151, according to a Royal Bank of Canada (RBC) report this week.

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About 18 per cent of parents gave their adult children (aged 18 to 40) between $10,000 and $19,999 over the past year.

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But it isn’t just the younger kids getting help with their bills — 37 per cent of parents with children aged 35 to 40 said they provided financial assistance to their older children.

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And while nearly a third (32 per cent) of Canadian parents said their adult children aged 18 to 40 are not yet financially independent, this included about one in five (19 per cent) parents of adult children aged 35 to 40.

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“We used to think of it as a linear line to financial independence; it isn’t quite so linear anymore,” said Lucianna Adragna, vice-president, client segments, Everyday Banking, at RBC, adding that Canadians are becoming financially independent later in life.

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Adragna said part of that dynamic is parents who want to give their children opportunities they didn’t have, though others in the report said their kids lack money management skills. Another key driver comes down to the rising cost of living in Canada, she said.

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Over the past six years, the consumer price index has climbed nearly 23 per cent, with shelter costs and food prices surging around 30 per cent, according to Statistics Canada. And Adragna said RBC’s projections indicate the cost of living in Canada will continue to increase over the next two to five years, especially given higher U.S. tariffs.

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“The economy has been in this ‘limbo position’ post COVID, and people are (settling into financial independence) later … so we don’t see this easing up into the future,” Adragna said.

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Cindy Marques, a Toronto-based certified financial planner and director at Open Access Ltd., said the COVID-19 pandemic “kicked off” a trend of parents supporting their adult children later in life.

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“That was a pretty financially devastating time for most people, and so I saw a lot of situations where they moved back home because their income was disrupted,” Marques said, adding that rising rents and runaway house prices intercepted plans for financial independence.

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In the past two years, she has seen more of her clients, who are mainly millennials in their thirties, face employment challenges. She is also seeing a growing number move back to their parents’ homes.

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“They’re having a hard time being able to save up to actually buy a house because rent is so high, or they want to get married or start a family, or they’re going through job transitions, and so the parents open the house back up,” Marques said.