It used to be that once children left the house for college, they would come home during breaks, but were on their own come graduation. But the recent tough economy and tight job market has created a generation of boomerang kids, and they're putting parent’s finances at risk.
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“Over the last two years the number of 20-somethings spending time back at home is very big,” says Stephen Reily, founder of Vibrant Nation, the online community focused on women over 50. “The financial impact is great on parents.”
Whether it’s recent college graduates who can’t find a job or offspring that can’t afford rent, adult children aren’t flying the coop like they used to and making mom and dad roommates.
While some parents might welcome the new company, the living situation creates new expenses that could hurt savings.
A recent survey by VibrantNation.com finds 84% of boomer women are paying more of their over 18-year old children’s expenses than the previous generation. The survey also shows 59% of respondents pay for an adult child’s cell phone, while 53% pay for insurance. Additionally, more than one-third are paying expenses like rent, clothes, cars and computers. These expenses don’t come cheap. According to the survey, 56% report they pay more than $5,000 in annual expenses on their children, excluding tuition and other education related costs, and 17% spend more than $10,000.
Audrey van Petegem, senior editor at The Succulent Wife is currently paying for her 21-year-old son’s room and board at college as well as interview attire, and expects him to move home after graduation.
“The 20-something generation expects their parents to help out a lot,” she says.
It used to be rare to hear parents supporting adult children, but now it’s becoming not only common-but anticipated. According to Reily, parents have become more engaged in their children’s lives and don’t feel like parenting should stop at age 18. Not to mention that parents today are typically in a better financial position than their parents were, making it easy for them to cover expenses.
“Children who graduate college have a much more limited range of choice and resources, which is why parents are so willing to step in,” says Reily.
Experts say it’s OK to support adult children, but warn against dipping into retirement savings or taking out loans to offer financial assistance.
“They should not be dipping into their own retirement for their adult children other than for a life-threatening illness,” says Reily.
Instead of pulling out the checkbook at every request, experts say parents should set boundaries. Parents might be willing to cover commuting costs to and from work or job interviews, but draw the line at entertaining expenses like happy hours and movie nights.
“You have to figure out what makes sense and communicate it clearly,” says Reily. “You have to stick to your guns.”
Erin Patrick, the mother of six children ranging in age 16 to 30 knows the importance of setting boundaries. Sure some of her kids have come back home after graduation, whether due to an illness or loss of job, but they never stay long, which Patrick attributes to raising independent children.
“We put a roof over their head a food in their mouths but we don’t pay for extra incidentals and entertainment,” she says, adding that parents tend to “over parent” and raise kids that don’t know how to take care of themselves.
“Don’t set them up for failure by giving them everything and not making them responsible,” she says.