In recent years, an increasing number of young adults have returned to live with their parents after initially leaving home to attend college or begin their careers. This “boomerang effect” reflects shifting societal and economic dynamics. While this trend isn’t entirely new, it has become more pronounced in the wake of the COVID-19 pandemic, rising housing costs, and changing attitudes toward financial independence.
As a Wealth Advisor, these are some difficult conversations I have initiated with clients facing this situation. While parents feel the need to provide help to their children, the reality is the potential negative financial impact on the parent’s retirement resources could alter their post-career aspirations. Dreams of travel, new hobbies and other goals could be wiped away if the financial impact of boomerang children is not addressed up front.
For many parents, having adult children move back in can be both a practical solution and a source of stress. For young adults, it’s often a way to save money, regroup, or adjust to a changing job market. But this growing phenomenon raises important questions about the evolving nature of adulthood, financial independence, and the long-term effects of intergenerational living.
We’ll explore factors driving this trend, and how both parents and young adults can navigate the challenges of living together while safeguarding their financial futures.
Economic Pressures Driving the Trend
The rise of boomerang children is largely driven by economic pressures. Many young adults face significant barriers to financial independence, including rising housing costs, stagnant wages, college degrees not aligned with the evolving needs of business, and the economic fallout from the pandemic. These factors create a difficult environment for young adults who would typically want to establish themselves financially and live independently.
Changing Societal Norms Around Adulthood
At the same time, societal norms around adulthood are changing. Today’s young adults may place a higher value on financial security than on traditional markers of independence like moving out. For them, returning to the family home offers a chance to save money, pay off student loans, or simply regroup before making the next life move. Parents, in turn, may find themselves housing their adult children once again, a situation that offers both emotional and financial benefits but also comes with new forms of stress.
Financial Strain on Parents
The financial burden on parents has grown in recent years. According to a Wall Street Journal report, 38% of parents are struggling to pay off debt, and 37% find it harder to save for long-term goals such as retirement or paying off a mortgage. These numbers reflect a major increase from previous years, when only 23% and 16% of parents, respectively, reported similar financial stress.
Having adult children at home often compounds this strain. The added cost of supporting young adults—whether through food, housing, or other necessities—can disrupt parents’ financial plans. Yet, with proper planning and clear expectations, families can manage the financial implications of this living arrangement without sacrificing long-term goals.
Protecting Retirement Savings
For parents, the top priority must be safeguarding retirement savings. Much like putting on your own oxygen mask first, parents need to ensure their own financial security before they can support their children. Staying on track with retirement contributions—such as contributing to a 401(k) or IRA—is essential for long-term financial health.
The Importance of Clear Communication and Boundaries
Clear communication is key to making a shared living situation work. Parents and children should discuss expectations around rent, groceries, utilities, and other living expenses prior to a young adult moving back home. Establishing a fair arrangement—whether through a rental fee or splitting costs—ensures that both parties contribute and reduces potential conflicts.
It’s also crucial to maintain boundaries. While offering a roof over their heads can be a form of support, parents should establish clear goals for their children to become more financially independent over time, including setting clear goals for moving out and starting their own path for financial independence.
Opportunities Within the Challenge
The rise of boomerang children speaks to broader societal and economic shifts. While it presents challenges for families—especially in terms of financial strain and evolving family dynamics—it also provides an opportunity to strengthen bonds, share resources, and support young adults in a challenging world.
To make intergenerational living work, both parents and children must prioritize open communication, set clear financial expectations, and focus on long-term goals like retirement. By doing so, families can navigate this trend in a way that benefits everyone involved, ensuring a stable future for both parents and boomerang children alike.
Secure Your Retirement Even While Supporting Your Children
Navigating the realities of adult children moving back home can be emotionally complex and financially demanding. But with the right planning, you don’t have to sacrifice your own goals to lend a helping hand.
At Konza Global Wealth Group, we understand the delicate balance between supporting family and protecting your future. Our team of experienced financial professionals offers comprehensive personal wealth solutions, including company stock strategies like Net Unrealized Appreciation (NUA), alternative investment opportunities, and business retirement plan advisory services.
Let’s build a strategy that supports your children without compromising your financial independence.
Frequently Asked Questions
Is it financially harmful to let adult children move back home?
Not necessarily, but it can be. Without proper boundaries and planning, supporting adult children may impact your ability to save for retirement, pay off debt, or pursue post-career goals. At Konza Global Wealth Group, we help families assess their financial readiness and develop strategies that protect long-term plans while offering temporary support.
How can I support my adult children without jeopardizing my retirement?
The key is proactive financial planning. Set clear expectations for shared expenses (e.g., rent, utilities, groceries), create timelines for your child’s financial independence, and prioritize your retirement savings. We recommend continuing regular contributions to retirement accounts like 401(k)s or IRAs and exploring strategies like company stock plans and alternative investments to grow your wealth.
How do I have “the money talk” with my adult child?
Be honest, respectful, and specific. Share your own financial goals and explain how supporting them affects those goals. Create a written agreement if needed—covering rent, expectations, and timelines. As advisors, we often facilitate these conversations and provide coaching to make them productive and balanced.
This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Konza Global Advisory, LLC in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.
The information contained in this writing should not be construed as financial or investment advice on any subject matter. Konza Global Advisory, LLC, expressly disclaims all liability regarding actions taken based on any or all the information in this writing.
