Since the start of the coronavirus outbreak, young adults have been returning home to live with their parents in higher numbers. Whether it was because school has closed or a result of economic pressures, new data from New York Life has found that five percent of parents have had an adult child move back home since early March.
These so-called “boomerang children” are not a new phenomenon but the economic pressures of the pandemic have accelerated the trend and squeezed family finances. This growing trend highlights the importance of family well-being, understanding that when adult children are living at home, they become part of the household’s financial conversations. Families are increasingly needing to speak honestly about how each member can contribute to the household – in addition to establishing house rules during the pandemic that everyone can live with.
Boomerang kids are the new norm
For many households, having an adult child at home has become common. In 2016, living with parents edged out other living arrangements for 18- to 34-year-olds for the first time in the modern era, according to Pew Research.1 But the numbers of those living at home rose during the pandemic.
More than 32 million adults in the US lived with a parent or grandparent as of April, according to a Zillow analysis of Current Population Survey data, up 9.7 percent from the same period a year ago and the highest level on record. Meanwhile, 39 percent of younger millennials (defined as ages 24 to 29) say they are either planning to or have already moved back in with their parents because of the economic downturn, according to research by TD Ameritrade.2
Growing financial strain
Our research has found that parents are spending more on supporting their children through the pandemic, and that spending is having a ripple effect on their long-term work and retirement outlook. While young parents are most financially jeopardized, with 24 percent of Millennial parents saying they’re spending more, those with adult children are effected, too. Of GenX and Boomer parents, 16 percent and 12 percent, respectively, are spending more on their children.
Although changing norms mean that having an adult child come back home to live isn’t uncommon, for many families it will be unexpected. For many of these parents, their financial strategies for the future may not have included supporting adult children, especially in an open-ended or potentially long-term arrangement. If adult children are unemployed as a result of the pandemic, it can be very difficult for them to assess when they will be able to move out or contribute financially to the household.
As a result, parents are having to change their financial strategies. Our survey discovered that nine percent of GenXers and four percent of Boomer parents are expecting to delay retirement because of COVID-19 expenses. Another ten percent of GenXers and three percent of Boomers say they’re contributing less to retirement savings in order to support their children.
The talking cure
The best way to tackle these shifting priorities is head-on by having open discussions about how short-term and long-term financial strategies for every member of the family – understanding the interdependence and how each person can be impacted can help as time goes on.
“It’s clear that more than ever, taking care of family is a priority for so many Americans,” said Jeff Beligotti, Vice President, Head of Long-Term Care Solutions, New York Life. “Our data also suggests that it is clear many families will have some difficult conversations about money on the horizon.”
“Given that many of these households are now sharing expenses in a way they might not have been before the rise of COVID-19, it’s important to discuss ways to ensure that financial goals for all generations in an extended family unit can be achieved, especially given the differing expectations of how long they expect to rely on one another. These are often emotional conversations, so enlisting the help of a trusted financial professional who can offer an independent perspective is incredibly valuable.”
In these conversations, everyone’s goals need to be assessed and balanced, so that care is provided for adult children without taking too much of a toll on the parents’ retirement goals.
Having a trusted financial professional guide you through this time – understanding ways to save, allocate funds, and adjust your portfolio can be extremely helpful. The value of human guidance to ensure you have the right pieces in place can provide peace of mind and increased confidence knowing you have a solid roadmap moving forward.
1 “For First Time in Modern Era, Living With Parents Edges Out Other Living Arrangements for 18- to 34-Year-Olds”, Pew Research, May 24 2016, Accessed October 12, 2020 https://www.pewsocialtrends.org/2016/05/24/for-first-time-in-modern-era-living-with-parents-edges-out-other-living-arrangements-for-18-to-34-year-olds/
2 TD Ameritrade research, ‘Covid-19 & Retirement Survey Impact of the Covid-19 pandemic on Americans’ retirement plans’, June 2020, Accessed October 20, 2020.
Go back to our newsroom to read more stories.