The phenomenon of “boomerang children”—adult offspring returning to live with their parents—has become increasingly prevalent in recent years. While this arrangement can offer temporary relief for young adults facing economic challenges, it often imposes significant financial and emotional strains on parents, potentially jeopardizing their retirement plans.
The Financial Impact of Boomerang Children
Supporting adult children can lead parents to deplete their retirement savings, delay retirement, or reduce their standard of living during retirement. A survey by Credit Karma found that 27% of parents who provide financial assistance to their adult children have postponed retirement as a result. Additionally, 76% reported that this support impacts their personal finances, with 52% cutting back on current living expenses.
Moreover, the cost of housing, utilities, groceries, and other living expenses increases with additional household members, further straining parents’ budgets. In some cases, parents take on additional debt to support their adult children, exacerbating financial insecurity.
Emotional and Social Considerations
Beyond financial implications, having adult children return home can affect family dynamics and parents’ mental well-being. While 85% of parents express happiness about their adult children moving back home, 34% report financial strain, and many worry about their children’s future independence.
Strategies to Mitigate the Impact
To balance supporting adult children and safeguarding retirement plans, consider the following approaches:
- Set clear expectations. Establish guidelines regarding the duration of the stay, financial contributions, and household responsibilities. This clarity can prevent misunderstandings and promote a sense of accountability.
- Encourage financial independence. Assist your children in developing budgeting skills, seeking employment, and managing expenses to prepare them for independent living.
- Charge rent or shared expenses. Requesting a reasonable contribution toward household expenses can alleviate financial pressure and teach financial responsibility. For instance, some parents charge their adult children a modest rent to cover increased living costs.
- Prioritize your retirement savings. Maintain regular contributions to your retirement accounts, even if it means limiting financial support to your children. Remember, there are no loans available for retirement.
- Seek professional advice. Consult a financial advisor to create a plan that accommodates your retirement goals while providing reasonable support to your children.
Conclusion
While it’s natural to want to support your children during challenging times, it’s crucial to balance this desire with the need to secure your financial future. By setting boundaries and encouraging independence, you can help your boomerang children transition to self-sufficiency without compromising your retirement plans.
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