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Seeing your kids off to college can kick off the empty nest years for many parents. But that may be changing.
A volatile economy, high student debt and rising housing prices have seen many adult kids “boomerang” back to their childhood homes in droves.
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A study from financial services firm Thrivent found that soaring real estate costs, among other factors, have made it increasingly difficult for young adults to afford their own homes — forcing many to return to their parents as a temporary solution while they save money or search for more affordable options.
In fact, 65% of parents admitted to providing some sort of financial support to their kids between ages 22 and 40, according to a USA Today study — with parents shelling out an average of $718 a month to support their adult kids.
But what are the financial implications for parents — and how can they navigate this tricky situation?
What started the boomerang kid trend?
In 2021, the U.S. Census Bureau reported that roughly one-in-three young adults lived at home with their parents.
Thrivent’s study showed that a significant number of young adults were even postponing key financial goals due to student loan debt. For example, nearly 40% of those surveyed are delaying home purchases, while more than a third (34%) are postponing saving for retirement.
Another 36% are skipping out on setting aside money for an emergency fund. Many young people (28%) also claimed they are living paycheck-to-paycheck while they pay off student loans, while only 22% believed their job aided them in reducing their debt.
Rising housing prices are a killer for 20-somethings entering the workforce. Rents are up and real estate inventory is down, which raises prices for both monthly rents and mortgages.
Financial consequences for parents
Allowing adult kids to move back home has several financial implications for parents.
When kids move back in, household expenses inevitably increase. Parents may find themselves paying higher utility bills, buying more groceries, and covering additional living expenses. These increased costs can strain the household budget, especially for parents who are nearing retirement or are already retired.
Parents may dip into their retirement funds or delay their retirement plans to accommodate the needs of their adult kids — potentially jeopardizing their financial security in the long term and draining the money available for their golden years.
Beyond the financial implications, parents may experience stress related to the prolonged financial dependency of their children and the challenges of adjusting to a new household dynamic.
It’s left many parents weighing the pros and cons of charging their adult kids rent.
Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here’s how
Tips for managing boomerang kids
In order to navigate the financial challenges of boomerang kids, parents should consider a frank, honest conversation before anything is set in stone.
Start by establishing clear expectations. This can help set up boundaries right out of the gate and can manage household dynamics and financial responsibilities.
Discussing contributions for household expenses and setting timelines for achieving financial independence can create a more structured and harmonious living arrangement.
Depending on the situation, it may be wise to encourage financial planning for adult kids. Providing guidance on saving, investing, and managing debts can equip them with the tools they need to eventually move out and achieve that financial independence.
Lastly, don’t be afraid to seek professional advice. Parents can benefit from outside guidance to help them navigate the complexities of supporting boomerang kids.
A financial adviser can offer strategies for balancing the immediate monetary needs of adult kids with their own long-term retirement goals, ensuring that both priorities are adequately addressed.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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