Here’s How Much Boomers Are Giving Their Kids
Money has always tended to flow from parents or grandparents to children and grandchildren, whether it’s as outright gifts, help with living expenses or paying for things like school. But the pace of that inter-generational transfer of wealth has picked up in recent years — and it could be threatening the retirement prospects of some baby boomers, according to a new report from the Employee Benefit Research Institute.
The report finds that the number of cash transfers going from older households to younger family members increased from 1998 to 2010. High-income households are more likely to provide support to their adult children, but middle- and low-income families are also providing cash to younger family members. Overall, from 2008 to 2010, households of adults aged 50 to 64 gave an average of $8,350 to younger family members, and households age 85 and older gave $4,787 to younger family members.
“For older households, cash transfers can reduce their retirement assets, raising concerns about retirement security, particularly for low-income groups,” EBRI research associate Sudipto Banerjee said in a statement.
Related: Sandwich Generation Squeezed Once Again
In just 5 percent of families, wealth is passed from the younger generation to the older, and the amounts are far smaller. During the same period, households age 85 and older received an average of $359 from those in younger generations.
The EBRI numbers confirm a trend highlighted in other recent reports. A 2013 Pew study found that about half of adults ages 40 to 59 have provided some financial support to at least one grown child in the past year, with more than a quarter of them providing the primary support.
Obviously, the economic climate of recent years may be a big reason for the increased cash flowing from parents to their grown children. More than half of parents of millennials think that it is harder for today’s young adults to live within their means than it was for them, according to an April Bank of America survey.
Small Business Owners Say They’re Raising Worker Pay
A record percentage of small business owners say they are raising pay for their workers, according to the latest monthly jobs report from the National Federation of Independent Business, based on a survey of 10,000 of the group’s members. A seasonally adjusted net 35 percent of small businesses say they are increasing compensation. “They are increasing compensation at record levels and are continuing to hire,” NFIB President and CEO Juanita Duggan said in a statement accompanying the report. “Post tax reform, concerns about taxes and regulations are taking a backseat to their worries over filling open positions and finding qualified candidates.”
The US Is Running Short on More Than 200 Drugs
The U.S. is officially running short on 202 drugs, including some medical staples like epinephrine, morphine and saline solution. “The medications most vulnerable to running short have a few things in common: They are generic, high-volume, and low-margin for their makers—not the cutting-edge specialty drugs that pad pharmaceutical companies’ bottom lines,” Fortune’s Erika Fry reports. “Companies have little incentive to make the workhorse drugs we use most.” And much of the problem — “The situation is an emergency waiting to be a disaster,” one pharmacist says — can be tied to one company: Pfizer. Read the full story here.
Chart of the Day: Could You Handle a Sudden $400 Expense?
More Americans say they are living comfortably or at least “doing okay” financially, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017. At the same time, four in 10 adults say that, if faced with an unexpected expense of $400, they would not be able to cover it or would cover it by selling something or borrowing money. That represents an improvement from 2013, when half of all adults said they would have trouble handling such an expense, but suggests that many Americans are still close to the edge when it comes to their personal finances.
Kevin Brady Introduces Welfare Reform Bill
The Tax Policy Center’s Daily Deduction reports that Rep. Kevin Brady (R-TX), chair of the House Ways and Means Committee on Friday introduced The Jobs and Opportunity with Benefits and Services (JOBS) for Success Act (H.R. 5861). “The bill would rename the Temporary Assistance for Needy Families (TANF) program and target benefits to the lowest-income households. Although the House GOP leadership promised to include an expansion of the Earned Income Tax Credit as part of an upcoming welfare reform bill, this measure does not appear to include any EITC provisions.” The committee will mark up the bill on Wednesday.