How Boomerang Kids Are Becoming the New Roadblock to Retirement
There's something to be said for moving back home to support your parents financially in their later years. Between the high cost of housing and inflation, returning home can be economical for the adult children, as well.
Learn More:
Try This:
But many adult children seek financial support from their parents rather than provide it. According to a Thrivent study, 46% of adult children ages 18 to 35 move back home. In 38% of cases, older parents report having their retirement plans and other long-term financial goals impacted by their children living with them.
Boomerang children are those who return home after a period of time living on their own. The biggest reasons this happens are housing affordability (32%), inflation (30%) and major life events, like divorce (20%).
According to the Thrivent survey, parents who've had their adult children move back home with them cite the following areas of their finances as having been most impacted by the change:
Saving for short-term goals: 39%
Saving for long-term goals, including retirement: 38%
Debt payoff: 34%
Savings for future health-related needs: 21%
Ability to support their own aging parents: 8%
While supporting your adult children isn't necessarily a problem, it certainly can be a roadblock to your other financial goals or needs.
'If your adult child is living with you temporarily, then all is well. If they are living with you on a longer or permanent basis and are helping with bills, that actually could be a financial benefit to all parties,' said Cynthia Campos Delgado, founder and financial advisor at Campos Wealth Management in McAllen, Texas.
'However, when it's a no-end-in-sight scenario and they are not helping by contributing financially, then that becomes unbalanced and unhealthy emotionally, as well as financially,' she added.
Find Out:
The cost of living is high. According to the latest data from the U.S. Bureau of Labor Statistics, the average person spent about $77,280 in 2023, the most recent available data. When adult children move back home, certain costs — like housing — may decline.
But sometimes their parents have to foot the bill for everything else, like increased utility bills or groceries.
'These added costs can directly reduce parents' ability to contribute to their retirement accounts, or even force them to dip into savings prematurely,' said Mindy Yu, a certified investment management analyst (CIMA) and senior director of investing at Betterment at Work.
Yu added that the 'financial strain could cause future retirees to delay their retirement date, and for those already retired, it might mean adjusting their lifestyle, cutting back on travel, hobbies or other desired retirement activities.'
Fortunately, there are ways to make the situation work. Alex Gonzalez, a financial advisor at Thrivent, had the following tips for those with adult children living at home:
Keep the lines of communication open. Approximately 60% of parents don't discuss the financial impacts of having their adult children living with them.
Help the adult children make a savings goal and a plan, so they can strike out on their own again.
Evaluate your own long-term financial goals and make sure providing financial support to your adult kids isn't getting in the way of that.
Check in with your adult children even after they've moved out on their own to make sure they're on track financially.
More From GOBankingRates
These Cars May Seem Expensive, but They Rarely Need Repairs
7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth
This article originally appeared on GOBankingRates.com: How Boomerang Kids Are Becoming the New Roadblock to Retirement
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fast Company
32 minutes ago
- Fast Company
Fear of Trump's tariffs sparked a rush on used cars—now prices are easing
Used car prices ticked down slightly last month in spite of uncertainty around tariffs, but buying a new old whip still costs more than it used to. In April, the average cost for a used vehicle shot up as consumers raced to lock in purchases ahead of potential price hikes driven by Trump's ongoing trade wars. The Manheim Used Vehicle Value Index from Cox Automotive, which tracks used car sales in the U.S., showed a 1.4% drop in prices last month, but prices are still up 4% compared to the same time last year. In April, used car prices saw their biggest spike since October 2023. 'While the market continues to digest the impact of tariffs, we could see a bit higher levels of wholesale depreciation over the summer,' Cox Automotive Senior Director of Economic and Industry Insights Jeremy Robb said in the report, while noting that low inventory could act as a counterbalance, driving prices back up. Compared to a year ago, luxury cars saw the biggest price increase at 6.5%, with SUVs close behind with a 5.2% year-over-year increase. Electric vehicle prices were up 3.1% compared to the same time last May. Used car prices in the U.S. have been a telling indicator of market forces in recent years. In the pandemic's early days, supply chain issues constricted the availability of new cars, driving more buyers to the used market. That demand sent used car prices up, and they mostly stayed that way. In March, President Trump announced a 25% tariff on imported cars and car parts, sowing fresh inflation concerns and sending supply chains into chaos again. Trump later eased tariffs for vehicles assembled in the U.S. using foreign parts – a reprieve intended to give U.S. automakers a break while they scramble to determine the feasibility of building domestic supply chains to replace parts sourcing abroad.
Wall Street Journal
32 minutes ago
- Wall Street Journal
The Score: Tesla, Cleveland-Cliffs, Dollar General and More Stocks That Defined the Week
The Score is a weekly review of the biggest stock moves and the news that drove them. U.S. steelmakers rallied on President Trump's recent move to double steel and aluminum tariffs to 50%.
TechCrunch
34 minutes ago
- TechCrunch
Anthropic appoints a national security expert to its governing trust
A day after announcing new AI models designed for U.S. national security applications, Anthropic has appointed a national security expert, Richard Fontaine, to its long-term benefit trust. Anthropic's long-term benefit trust is a governance mechanism that Anthropic claims helps it promote safety over profit, and which has the power to elect some of the company's board of directors. The trust's other members include Centre for Effective Altruism CEO Zachary Robinson, Clinton Health Access Initiative CEO Neil Buddy Shah, and Evidence Action President Kanika Bahl. In a statement, Anthropic CEO Dario Amodei said that Fontaine's hiring will '[strengthen] the trust's ability to guide Anthropic through complex decisions' about AI as it relates to security. 'Richard's expertise comes at a critical time as advanced AI capabilities increasingly intersect with national security considerations,' Amodei continued. 'I've long believed that ensuring democratic nations maintain leadership in responsible AI development is essential for both global security and the common good.' Fontaine, who as a trustee won't have a financial stake in Anthropic, previously served as a foreign policy adviser to the late Sen. John McCain and was an adjunct professor at Georgetown teaching security studies. For more than six years, he led the Center for A New American Security, a national security think tank based in Washington, D.C., as its president. Anthropic has increasingly engaged U.S. national security customers as it looks for new sources of revenue. In November, the company teamed up with Palantir and AWS, the cloud computing division of Anthropic's major partner and investor, Amazon, to sell Anthropic's AI to defense customers. To be clear, Anthropic isn't the only top AI lab going after defense contracts. OpenAI is seeking to establish a closer relationship with the U.S. Defense Department, and Meta recently revealed that it's making its Llama models available to defense partners. Meanwhile, Google is refining a version of its Gemini AI capable of working within classified environments, and Cohere, which primarily builds AI products for businesses, is also collaborating with Palantir to deploy its AI models. Techcrunch event Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Boston, MA | REGISTER NOW Fontaine's hiring comes as Anthropic beefs up its executive ranks. In May, the company named Netflix co-founder Reed Hastings to its board.
