In the past, when adult children left their parents’ nest, rarely were they expected to be living under that same roof again. Many parents did not anticipate the responsibility of financially supporting offspring past their college days. In the several years since the Great Recession, more and more adult children may be mumbling “I’ll be back” under their breaths, at least knowing that it’s a significant possibility. Today’s almost empty nesters continue to be met by the Terminator’s favorite phrase, and discussing this phenomenon is quiet potent.
This group of adult children is referred to as the boomerang generation; a clever nickname indeed. These 18-35 year old cohorts are very much like the U-shaped toy, they are released by their parents only to come right back home again. The main force behind returning to their original abode is financially based.
Many of the sons and daughters of baby boomers need to move home to avoid a mountain of debt, or adding to the debt they already have. College costs have sky rocketed in the past few decades and are strapping today’s students with an average of over $30,000 of debt per college graduate. Trying to find a job, reasonable apartment, payment plan for loans and the on-going laundry list of things that lead to success in today’s world is tough. And to do it all quickly is even more of a challenge.
Therefore, many children look to move home, save money and figure out their next step. Unfortunately for their parents, this usually comes with a caveat of having to continue financial support after releasing their offspring into the real world. For the group of parents who can support themselves and their children while not altering their retirement plans, we respect and appreciate your ability to do so. However, for the bulk of the population this is not the case, so we want to expand on what this means.
Baby boomers are potentially putting their retirement at risk when an offspring moves back home after they were once independent. This sounds like a scary thing, and although it should not be taken lightly, it can also be wonderful. We all have been in a situation where we have asked someone for help or relied on a loved one. We stress that this type of help should be discussed and a plan for how much and how long assistance is given should be constructed. More often than not parents do not understand or have finally realized the potential negative financial impact a boomerang can bring back home.
As parents, it’s a natural emotion to want to support and nurture your young. In our industry we come across countless stories of parents subsidizing adult kids, forcing the parents to work longer or harder than they planned. Paying for rent, or allowing a boomerang to live rent-free diminishes the savings or nest eggs parents worked hard to create.
Establishing a family rental agreement is a good plan that allows parents to help their offspring and provide a life lesson. It becomes beneficial to both parties. Deciding on what is a fair amount is a case-by-case task. Although most children do not like chores, expecting them to help out around the house, cook a meal, or do yard work is an avenue worth exploring.
We all want what’s best for each following generation. We know they are the future. Yet sometimes even a parent, guardian, or loved one of a boomerang needs to become selfish. Let’s put ourselves first or at least in line with those we are assisting. It would be a beneficial life lesson for all of the generations involved.