Adult Children Moving Back Home

They're back. The "Boomerang Kids" — young adults who left to go to college, get married or just strut their independence — are moving back in with mom and dad. Boomerang Kids can be a mixed blessing for parents, both emotionally and financially.

The trend is cyclical. Especially during tough economic times, adult children head for home. In MonsterTRAK’s 2007 survey of college students and recent grads (http://career-advice.monster.com/articles/3471/18882/1/home.aspx), 48 percent of the Class of 2007 said they planned to boomerang home for at least a little while post college. Moreover, 42 percent of the 2006 graduates surveyed said they’re still living at home. ¹

The reasons are many, the first being economics. According to the Bureau of Labor Statistics, 8.4% of 20-to-24-year-olds were unemployed in October 2006 vs. 6.7% in September, 2000. The jobless rate for 25-to-34-year-olds had also risen to 4.6% from 3.7% over the period.² That sent a lot of young folks back home. Plus, there is the matter of debt, especially college loans. For many recent grads, it made smart economic sense to move back in with their parents – where life is comfortable and rent is either low or nonexistent – while they get their finances in order. Then, of course, some return for personal reasons, to recover from a divorce or an illness, or just because they cannot afford their parents' lifestyle living on their own.

Caution: Parents are often happy to help out, both emotionally and financially. As a result, the arrangement often works to everyone's satisfaction. However, there are risks, especially for the parents. These include family tension and misunderstandings, but also money.

The return to the nest can become a financial burden that can derail the parents' plans and jeopardize their financial future, especially their retirement, as they try to do too much for their children. For example, if parents pick up a son's college loan, that payment is money not going toward their own retirement savings, very often at a time when the parents need to be stashing cash at an accelerated pace to meet retirement needs.

Success Factors
Studies show that the return to the nest works best when several factors are present:

• Initiate a serious discussion early on to ensure that you and your child have the same expectations about the living arrangement. Define why your child has decided to live at home: to start a career and save money, prepare for graduate school or take a break from everything?
• Set clear expectations — as you would with any boarder — about your child's obligations regarding expenses and household chores. Discuss whether he can have dates over for dinner or even to spend the night. If your child plans to spend the night out, should he call home first? By setting and enforcing expectations, parents help their children learn the skills they need to live independently.
• Set a time limit: If your ultimate goal for your child is independence, set a limit for how long she can live in your house. You can adjust that deadline later if desired. Experts say it's best for everyone to be on the same page in order to avoid the resentment that might arise from vastly disparate assumptions.
• Charge Rent: For some parents — and countless more children — the mere mention of charging rent to a family member draws an incredulous reaction: "Are you serious? But I'd do anything for my kids!"

  But for other parents, attaching a monthly financial commitment to the housing deal both prepares children for living independently and helps parents keep up with home finances. Some experts strongly encourage parents to demand rent from their adult children. Jane Adams, Ph.D., author of Boundary Issues (Wiley, 2005) and When Our Grown Kids Disappoint Us (Free Press, 2004), says paying rent is key to a child's development and that the amount should be close to what someone would pay in a group house or for an apartment.

• Respect each other’s space: Today, simple respect goes a long way in keeping the peace at home.
• Keep Your Promises: If parents and adult children hold to their agreements and continue to respect one another, they won't encounter many problems. Resentment can arise when either parents or children are not doing what they've agreed upon. If things start to unravel, have a family meeting to discuss expectations and boundaries, experts say.

In almost all cases, the cohabitation arrangement will end eventually. Until it does, insist that your child carry her own weight around the house, and teach her the skills she'll need to live on her own. (When a Recent Graduate Moves Back Home: Survival Tips for Parents, June 13, 2007, by Lisette Hilton, Revolution Health Group)

• Help them restructure debts, rather than simply bail them out. Then teach them how to avoid new debt. One option is to match debt–reduction payments, with the understanding that they put away credit cards and live within their means.
• Do not sacrifice your own financial future. Decide how much you want and can afford to help. Children tend to think their parents are wealthy, while some parents provide more financial support than they can afford. Remember that your children have decades to build their financial security, while you may be only a few years away from your retirement date. Ironically, if you are not careful, you could end up depending on your children for help in your old age.
• Stay Organized: Having your children return home can be stressful. One way to help manage stress and anxiety is to stay organized. When it comes to your finances, few people have time to file all their paperwork. And yet it’s important to know where you can find your life insurance policy or will should an emergency arise.

New York Life has a financial filing system you can handle. It’s called the LifeFolio System — Your Lifetime Financial Organizer. The LifeFolio Kit, which can be ordered simply by calling a New York Life agent, contains 24 pre-labeled dividers, a personal document checklist, a guide to getting organized and a brochure entitled "A Death in the Family," outlining all the steps you need to take when a death occurs. LifeFolio not only helps you organize what you have — it helps you identify what you may need down the road.

Boomerang Kids – having your children return to the safety net of their home – can be wonderful time of family closeness. Setting the tone, laying out the ground rules, and making smart–money financial decisions can help create a positive, supportive environment that is in the best interests of you and your returning family members. Your role is to guide them. Good luck.

¹ (Live With Your Parents After Graduation,” by Peter Vogt, MonsterTRAK Career Coach, MonsterTrak’s 2007 survey of College students and recent grads)
² (US Department of Labor, The Employment Situation, October 2007)

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