They're back. The "Boomerang Kids" - young adults who left to go to college, get married or just strut their independence - are moving back in with mom and dad. Boomerang Kids can be a mixed blessing for parents, both emotionally and financially. According to a recent survey by the Pew Research Center finds that 13% of parents with grown children say one of their adult sons or daughters has moved back home in the past year.1
The trend is cyclical. Especially during tough economic times, adult children head for home. According to Monster's 2009 Annual Entry-Level Job Outlook, about 40 percent of 2008 grads still live with their parents. Moreover, 42 percent of the 2006 graduates surveyed said they're still living at home.2
The reasons are many, the first being economics. While the recession has touched Americans of all ages, it has been particularly hard on young adults. According to the Bureau of Labor Statistics, in October 2009, 15.6% of 20-to-24-year-olds were unemployed vs. 8.7% for people over 25.3
That sent a lot of young folks back home. Plus, there is the matter of debt, especially college loans. For many recent grads, it made smart economic sense to move back in with their parents - where life is comfortable and rent is either low or nonexistent - while they get their finances in order. Then, of course, some return for personal reasons, to recover from a divorce or an illness, or just because they cannot afford their parents' lifestyle living on their own.
Caution: Parents are often happy to help out, both emotionally and financially. As a result, the arrangement often works to everyone's satisfaction. However, there are risks, especially for the parents. These include family tension and misunderstandings, but also money.
The return to the nest can become a financial burden that can derail the parents' plans and jeopardize their financial future, especially their retirement, as they try to do too much for their children. For example, if parents pick up a daughter's college loan, that payment is money not going toward their own retirement savings, very often at a time when the parents need to be stashing cash at an accelerated pace to meet retirement needs.
Success Factors
Studies show that the return to the nest works best when parents:
In almost all cases, the cohabitation arrangement will end eventually. Until it does, insist that your child carry her or his own weight around the house, and teach her or him the skills they'll need to live on their own.4
Finally when it comes to debt and helping your children out financially remember these three key points: