Baby Boomers could end up $227,000 richer if they stop bankrolling their adult children

AP Photo/Alan Diaz

• Parents who pay for their adult children might be hurting their retirement.
• Paying for their children's expenses could cost parents up to $227,000 in retirement savings, according to a NerdWallet analysis.
• Parents need to figure out if they can afford to pay for their adult children. If not, they should ask their kids to start pitching in.

Parents sometimes pay for their adult children's expenses - and it could be hurting their retirement.

In fact, they might be missing out on a quarter of a million dollars in retirement savings by supporting their adult children, according to an analysis by NerdWallet.

80% of parents with adult children are paying or have paid for at least some of their children's expenses, according to a survey on the spending and saving habits of US adults by Harris Poll on behalf of NerdWallet.

Looking under the hood of that data, the survey found parents of adult children are paying or have paid for the following:

• 56% for groceries
• 40% for health insurance
• 21% for rent or housing outside the family home
• 39% for the child's phone bill
• 34% for car insurance

The two most expensive costs are living expenses and college tuition. And parent's retirement savings could be $227,000 higher if they chose to save that money instead of putting it into their child's living or schooling expenses, NerdWallet found.

Andrea Coombes, retirement and investing specialist at NerdWallet said parents should run the numbers to figure out if they can actually afford to help their children with their expenses.

"Parents who need to ramp up their savings rate should have a conversation with their children. Parents can let their children know they're at risk of financial insecurity later in life and they don't want to be a burden to their children," Coombes said. "And parents should ask their adult children to start pitching in on some of these expenses. It'll be good for the parents' retirement, plus it models to the children the importance of budgeting, saving and planning for the future."

To figure out the projected savings, Nerd Wallet found the average of all those costs, and calculated the potential impact on the parents' retirement savings if they paid for their adult children's bills for one, three, or five years. They assumed that the parents would put that money into a retirement savings account like a 401(k) or an IRA instead of paying for their kids.

Interestingly, over half of all adults surveyed (meaning, not only those with adult children) said they're confident they're contributing enough to their retirement savings. And almost a quarter of parents saving for retirement expect their children to help them financially in some way after they retire.

Helping adult children foot the bill might not necessarily hurt parents in retirement, if they can afford to pay for everything. But if paying for college, the phone bill, and groceries comes at the expense of retirement savings, parents will feel the pain later on in retirement.

"As parents, we tend to want to do everything we can to help our children succeed," Coombes said. "But sometimes we focus on the present at the expense of the future."