25 Is the New 21
For some parents, the deadline for a kid's financial independence has gotten an extension.
My 22-year-old daughter, Emma, waved goodbye to her college campus last spring and walked into a job this fall. Given the still-tepid state of the economy and all the stories—in the news and from friends—about recent graduates who can’t find work, you might well imagine that my husband and I are thrilled. And we are. Sort of.
Emma’s job is a good one, and she is lucky to have it. She is an editorial assistant at a well-respected magazine. But it is the kind of job that countless millennials are landing these days: part-time, low paying, with no benefits.
So, after we spent nearly a quarter of a million dollars on her college education, one thing has become clear: Our investment in our daughter’s future is far from over.
We are hardly alone: Across America, 25 is the new 21.
In his recently published book, The Age of Opportunity, Temple University psychologist Laurence Steinberg reports that today’s 25-year-olds are 50 percent more likely to be receiving financial assistance from mom and dad than the 25-year-olds of their parents' generation.
For twentysomethings, this is just one part of a larger phenomenon that is also marked by a growing propensity to stay in school and remain unmarried for much longer than prior generations. Adolescence, according to Steinberg, now stretches over a 15-year span, beginning at age 10 and ending around 25; that’s more than twice as long as during the 1950s. This may not be a bad thing. Steinberg’s research suggests that putting off adulthood can have certain benefits in terms of brain development and mental health.
For the parents of twentysomethings, though, this delay often comes at a decided cost. Take our family, for instance: Emma is earning $12 an hour at a 30-hour-a-week job. Her take-home pay, after taxes, is $1,235 a month. Meanwhile, her total monthly expenses hover around $2,000. This includes the cost of a basement room she’s renting for $500 (about as cheap as you can get in San Francisco, one of the most expensive cities in the country), food, clothing, gas and maintenance on her car, entertainment, and incidentals.
The only reason that she’s not falling into debt is because my husband and I help her financially. We provide $200 in cash each month, as well as covering her car insurance and cellphone (she’s on the family plan), and occasionally I take her clothes shopping and spring for a haircut and mani-pedi. We also pay her student loans, as it was always part of our financial planning that my husband and I would pay for her college education.
Emma also remains on our family’s health insurance, and probably will until she turns 26, as the Affordable Care Act allows. What’s more, her grandparents are pitching in, too. My mother has decided to give Emma an additional $300 a month for a full year as a graduation gift, with an eye on helping her get settled in life. Her father's parents bought her a used Honda so she wouldn’t face a monthly car payment.
Extending financial help to one’s children in this way is, of course, a luxury. Many of my friends—as well as my husband and I—are upper-middle-class, and more than a few in our circle are one-percenters. The majority of Americans simply can’t afford to help their children to the degree that we are fortunate enough to be able to.
Whether we’re doing too much or too little for Emma is a source of constant conversation in our house. Is this just another form of over-involvement in a kid’s life, a monetary form of helicopter parenting? How long should our support continue? When does a financial lifeline become a crutch? My husband likes to joke that Emma needs to get ready. “One day,” he says, “we will end welfare as we know it.”
Other parents are navigating the same tricky terrain. Many are reluctant to talk about it, at least with their names attached. In the half-dozen interviews I conducted for this story, every person I talked to requested anonymity for fear that their kids would look unprofessional or feel embarrassed. Even as it becomes more common for parents to help their adult children pay their bills, talking about money still remains a taboo.
“We have a cultural stereotype about these kids being slackers,” Steinberg told me. “But we don’t see any evidence of that.”
A close friend of mine has three children: a 24-year-old, a 22-year-old who graduated last year, and one more still in school. She says she and her husband made a conscious decision to help support all three until they hit 25.
Why 25? “I feel that when you are 25, you are an adult and being financially dependent after that is just not healthy,” she says. “I think it is our role as parents to apply some pressure toward independence. The reality is, we are not going to let our kids starve. But telling them we are not going to help after 25 is turning the flames up a lot.”
In the meantime, my friend’s oldest child is getting help with her rent in New York City, her health insurance, her cellphone, Netflix, and other incidentals while she studies fine art. Her middle child has been working at a part-time job and living at home.
“We keep telling our kids that financial independence is the goal,” she says. “But we wanted to give them a safety net so they could practice it.”
Even kids with good jobs and no student loans to worry about are getting help from mom and dad. Another friend, whose 23-year-old works for a wealth management firm and earns a mid-five-figure salary, says she and her husband still pay their daughter’s car and health insurance and have kept her on the family’s cell phone plan.
“She makes a good salary, but rent and expenses are high,” the mom says, adding that her daughter’s job requires that she look professional. “She has to dress well, get her nails done, and drive a reasonably nice car.”
“I hardly know anyone who is not receiving some kind of financial support,” a 26-year-old family friend told me. “Whether it is health insurance, their cell phone bill, or even full rent being paid or tuition for graduate school, pretty much everyone I know gets help.”
This young man, who comes from a small town on the East Coast and now lives in Los Angeles, says his parents originally expected him to be able to make it completely on his own within six months after graduating from college. He did, for the most part—working three jobs as a waiter, a tutor, and at a nonprofit. His parents paid his car insurance for a year and he remained on their health insurance plan until switching to Obamacare this year. Now that he is planning to apply to medical school, they are committed to doing much more, including picking up his rent. All the while, like many kids, he's still tied to his parents with a digital umbilical cord, staying on the family cellphone plan, and Netflix account. When his car recently died, they helped him buy another one. “It just seems like a fact of life,” he says. “Entry-level jobs these days—unless they are in engineering or finance—don’t cover your basic needs.”
It’s no wonder why. The Economic Policy Institute has found that entry-level hourly wages fell on average for both female and male college graduates from 2000 to 2013—8.1 percent among women and 6.7 percent among men. And the unemployment rate for 20- to 24-year-olds remains exceedingly high, at 11.4 percent (compared with 5.9 percent overall).
“It’s only natural for people to compare their kids to what they were like when they were that age,” Steinberg said. “But what you have to remember is that times have changed. Parents need to resist the temptation to say, ‘When I was your age, I had a job and I took care of myself.’ That is not relevant now. We do not live in the same world.”
In the end, what is most important is not that someone fresh out of school, or even a few years out of school, has achieved financial independence. What matters is that they are on the path to independence. If our daughter was at home all day, goofing around, my husband and I would be far less inclined to lend a hand. But the job that Emma now has—one that we’re enabling with our support—promises to give her valuable experience in a field she’s interested in.
And it may well advance her “real” job prospects—and her independence—down the line. We’re confident that one day she’ll get there, whether that comes at 23. Or 25. Or 25-ish.