Nearly half of Canadian parents plan to support adult children financially, BMO finds

More Canadian parents and grandparents are stepping in to help Gen Z and millennials handle rising financial pressures, new BMO survey data showed.

The survey, conducted by Ipsos for BMO, found that 45% of Canadian parents and grandparents planned to provide financial support to their adult children or grandchildren within the next year.

“As many young Canadians navigate the current economic environment, parents and grandparents understandably want to help alleviate some of the financial pressures – from rising housing costs to education and childcare,” Anthony (Tony) Tintinalli, Head, Specialized Sales at BMO, said.

“While support can make a meaningful difference, it is important to strike a balance between generosity and protecting your own long-term financial health.”

The findings revealed that nearly three-quarters (73%) of Canadians intend to leave an inheritance, while 69% plan to pass on personal property and 65% expect to transfer real estate or property. Nineteen percent will also pass down debt to the next generation.

Gen Z and millennials are not just recipients, but also caught in the crosshairs of caregiving. The so-called “sandwich generation” is feeling the squeeze, with 37% responsible for aging parents or in-laws, and 15% raising children at the same time.

“The Canadian labour market has weakened considerably in recent years, first driven by past interest rate hikes and a surging supply of labour, and now a highly uncertain trade backdrop weighing on the economy. Nowhere are these factors more apparent than in the youth job market – the unemployment rate for people aged 15-to-24 years has jumped to 14.5% as of August, more than twice the national rate of 7.1%,” Shelly Kaushik, Senior Economist at BMO, said.

“Wage growth for this group has also cooled significantly, at 1.2% year over year in August compared to 3.2% for all workers.”

The survey showed that more than half of Gen Z (53%) and millennials (51%) expect to get a cash inheritance, and many also expect to receive property or investments.

Lydia Potocnik, Vice-President and Regional Director, Estate and Trust Services at BMO Private Wealth, said, “Fostering open communication among the generations about wealth, legacy plans and shared family goals and values, is an important step as our experts provide guidance and develop plans to help optimize the growth and transfer of wealth, helping future generations continue to grow and prosper over time.”

There has been a growing role of family in down payment assistance and the challenges facing first-time homebuyers in a high-cost environment. A recent Royal LePage survey also found that 41% of first-time homebuyers expect financial help from family or friends, while 51% do not.

“This transfer of wealth has become increasingly common, as parents look to give their children the same opportunity for stability and long-term financial growth that they themselves experienced through home ownership,” said Phil Soper, president and CEO of Royal LePage.