The pandemic forced some adult children, “boomerang children,” to move back into their parents’ homes, and the skyrocketing prices in homes and rentals probably will exacerbate the problem, according to Thrivent, a not-for-profit financial services firm based in Minneapolis and Appleton, Wis.
Although parents usually are inclined to reach out to help, they should consider how much they can afford and the potential impact on their retirement, Thrivent said in the “Boomerang Kids Survey” released yesterday. They should be prepared to rely on a financial advisor to help them work out the details, Thrivent said.
Seventy percent of parents are not using their adult children’s return to have a discussion about money management or setting financial expectations, according to the survey of 500 parents and 700 adult children.
"It's important to have a mutually agreed-up plan," Boone Jackson, a Thrivent financial consultant, said in the survey. "Instead of enabling them with a free ride, you can instead be an advocate and a mentor by teaching them how to foster their own financial growth. For example, you can help with research on getting loans, instead of taking out the loan on their behalf."
In order to attack this situation and come out the other side with relationships intact, parents and children should consult a financial advisor, preferably one who has helped other parents navigate the same issues. According to the survey, 40% of parents said they had an adult child living with them, and 26% said they had an adult child who was temporarily living with them but then moved out. Thirty-three percent said the child moved back because of increasing home and rent prices, 26% said the child needed additional support after graduation from college or high school and 17% said the child lost a job.
In many cases, the expectations of the parents and the children diverge. Of young adults already living with their parents, 72% said they think their parents are financially equipped to support them. But only 21% of parents said they could provide full financial support to their adult child. Thrivent advised parents to work with their children on a realistic budget, on their future plans and on setting a timeline.
Having adult children at home can derail the parents’ retirement. Parents need to determine when they intend to retire. “Once you know when you'll start living on a fixed income, it's easier to know what you can offer and for how long,” Jackson said. Parents should be on course to stay with their original retirement plans. "It doesn't make sense to let your child's financial circumstances become enough of a burden to postpone your retirement."
Thrivent advised parents and children to be flexible. “When you put some serious thought into how to structure your living experience with your adult son or daughter, you can not only avoid conflicts, but actually grow your relationship with them,” the survey said.