Boomerang Kids: Suggested Ground Rules

Do you know anyone who has an adult child living at home for financial reasons? Most people do. Yet very few pre-retirees have this situation on their radar.  They do not think this as a financial risk to their own retirement or break out financial support for adult children as a planned budget item. Boomerang kids are used to describe adult children who move back in with their parents after a period of living on their own. This phenomenon has been growing since 1980 when only 11% of 25- to 34-year-olds were living with their parents. Over the past few years, that number has soared to 29%, with 60% of young adults receiving some financial support from their parents.

Is this a bad thing?

Everyone’s situation is different, but here is the positive spin: living at home could be considered the responsible thing for your adult child to do rather than racking up debt or living a lifestyle he or she cannot afford.

Nearly 45% of 25-year-olds have outstanding loans, and half of recent college graduates are either unemployed or employed in low paying jobs that do not require a college degree.

The good news for these boomerang kids is there is no longer a stigma attached with moving back in with Mom and Dad. Furthermore, young adults are quite optimistic. Among adult children, 77% still believe they will be better off than their parents, and 91% of those in their 20s believe they will eventually be able to afford the lifestyle they want.

The question many people are asking is: Why are boomerang kids not able to make it on their own these days?

There are many reasons. For one, global trade and technology have eliminated many middle-class jobs. In 1970, only one in 10 Americans had a bachelor’s degree, which all but ensured a comfortable career. Today, approximately one-third of young adults will earn a four-year degree, but many of them will not be able to find long-term, secure employment in their field of education. However, don’t let statistics get you down—the next Facebook or Google could be started in your living room.

Advice for parents of boomerang kids:

If your adult kids want to move back in, here are some unsolicited suggestions to promote peace:

  1. Establish ground rules upfront (e.g., smoking, drinking, overnight guests, etc.).
  2. Do not be too financially accommodating.
  3. If your child has a job, household expenses should be shared.
  4. If your child does not have a job, household chores should be shared.
  5. If you don’t need your child’s rent money, think about putting it in an account that you can give back to him or her later.
  6. If your child needs financial help, decide whether it is a gift or a loan. If it is a loan, insist that it is paid back and document the agreement.

Lastly, always remember to build up your children. The most important asset anyone has is their self-esteem.