Wealthy Parents Have Turned Into Banks for Their Children. Why That’s a Problem.

(Illustration by Elias Stein)

The great majority of wealthy parents are giving their adult children financial support, according to a new survey by Ameriprise. Three-quarters of the survey’s 554 respondents are footing the bill for their adult children’s big-ticket items, like down payments on homes or tuition for graduate degrees. Nearly two-thirds are also covering ongoing costs like phone bills.

The results demonstrate the prominent role the “Bank of Mom and Dad” now plays in the life of America’s mass-affluent class. But that bank may not be turning a profit. More than a third, or 36%, of respondents worry that supporting their children could hamper their own retirement plans.

Created with Highcharts 9.0.1The Parent TrapPercentage of surveyed Americans who say they’re funding, or preparing to fund, the​following for their children. Source: Ameriprise

Created with Highcharts 9.0.1Contributing to the purchase​of a vehicleHelping to pay for a weddingCosigning a credit cardHelping to pay for a home​purchasePaying for education beyond​undergrad0%20406080100

Deana Healy, Ameriprise’s vice president of financial planning and advice, says poor communication is part of the problem. If parents don’t clarify which expenses are off-limits, they can end up on the hook later in life. And their children may not take steps to become financially independent.

Created with Highcharts 9.0.1Boom to BustBaby boomers on average make up the wealthiest generation in history. Still, many are​worried. Assets owned, net of mortgage debtSource: UBS Global Wealth Report 2025

Created with Highcharts 9.0.1Born before 19461946-19641965-19801981 or later$0 thousand$10$20$30$40$50$60$70$80$90

Several factors explain why parents are getting more involved. First, the cost of housing and education has been rising rapidly in real terms. Second, young people are achieving major milestones, including full-time work and parenthood, later in life, partially due to rising college participation. Third, today’s baby boomers are the richest generation in history. They therefore have more resources to dedicate to their children. So they do.

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Last Week

Markets

The government shut down after Senate votes on a continuing resolution failed. Gold surged, the dollar fell, and the S&P 500 and Dow industrials hit highs. The White House withdrew its nominee to run the Bureau of Labor Statistics, which shut down without releasing its payroll data; ADP said the U.S. lost 32,000 private jobs in September; and the Supreme Court said governor Lisa Cook can stay at the Federal Reserve for now. On the week, the Dow and the S&P rose 1.1%, while the Nasdaq Composite gained 1.3%.

Companies

U.K.-based AstraZeneca will list its shares directly in New York. The Securities and Exchange Commission allowed Dimensional Fund Advisors to add exchange-traded fund share classes to its mutual funds. Pfizer agreed to lower drug prices to Medicaid in exchange for tariff relief, selling through TrumpRX, a consumer website. The U.S. is taking 5% stakes in Lithium Americas and in its Nevada project with General Motors.

Deals

Car parts dealer First Brands declared bankruptcy, with $10 billion to $50 billion in liabilities, mostly from private lenders… Electronic Arts announced its $55 billion buyout, the largest ever, by Saudi investors, Jared Kushner’s Affinity Partners, and Silver Lake…The Financial Times said BlackRock’s Global Infrastructure Partners was close to buying AES for $38 billion, and Bloomberg reported GIP was near a deal for Aligned Data Centers for $40 billion… Berkshire Hathaway is buying Occidental Petroleum’s OxyChem business for $9.7 billion.

Next Week

Monday 10/6

Four S&P 500 index companies release earnings this week. It will be the calm before the storm, as third-quarter earnings season unofficially kicks off on Oct. 14, with the big banks reporting. Constellation Brands announces quarterly results on Monday, followed by McCormick on Tuesday. Delta Air Lines and PepsiCo hold conference calls to discuss earnings on Thursday.

Wednesday 10/8

The Federal Open Market Committee releases the minutes from its mid-September monetary-policy meeting. The FOMC cut the federal-funds rate by a quarter of a percentage point to 4%-4.25% at that confab, with newly appointed Fed governor Stephen Miran dissenting in favor of a half-a point rate cut. Traders are fully expecting another quarter-point cut at the FOMC’s late-October meeting.

Friday 10/10

The University of Michigan releases its Consumer Sentiment survey for October. Consensus estimate is for a 54.5 reading, slightly less than September’s 55.1. Consumers’ expectations for the year-ahead inflation was 4.7% in September, and 3.7% for longer-run inflation. There has been a deep disconnect for several years between a rising stock market and dour consumer sentiment.

The Numbers

267%

The rise in electricity costs over the past five years in areas adjacent to significant data-center activity.

140

Average minutes spent on social media per day by users over 16 at the end of 2024, down 10% from 2020.

$1.3 T

Global M&A deal volume in the third quarter, up 40% year over year, fueled by a series of megadeals.

19 K

The number of private-equity funds in the U.S., some 5,000 more than McDonald’s restaurants.

Write to Robert Teitelman at bob.teitelman@dowjones.com