Safeguard Your Retirement Plan When Dealing with Boomerang Kids

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Boomerang Kids and Safeguarding Your Retirement

Recent Study Shows Many Adult Children Moving Back Home-Could Impact Retirement Plans

A recent study from Thrivent shows that 46% of adults ages 18 to 35 have moved back in with their parents. Nearly two in five (38%) of boomerang parents who have had their children move back home say financially supporting their adult children has impacted their savings for long-term goals, like retirement.

Young adults today face a variety of financial challenges that make it more difficult to pay rent or buy a home. These include housing costs, growing student loan debt, stagnant wages, and job market instability.

When an adult child moves back in, it’s important to establish boundaries so each of you knows what to expect out of the arrangement. Some parents may be fine with an adult child living rent-free as long as they help out with housework or other household duties. Others may require their child to pay rent or pay for household expenses, like grocery and utility bills.

How to Manage the Situation Financially

Here are some tips for managing your finances when an adult child returns home.

  • When an adult child moves in, set boundaries with them. Let them know how long they’re welcome to stay and how they’re expected to contribute to the household.
  • Stay focused on your own retirement needs. Continue to contribute to your company’s 401(k) and your individual retirement account. Make use of catch-up contributions if you are 50 or older.
  • If you’ve helped an adult child financially and are behind your retirement savings, try to delay retirement by continuing to work. Waiting to claim Social Security benefits until age 70 can provide a big financial boost.

Decide what will work for your family and have an upfront conversation with to avoid any misunderstandings. Ultimately, your long-term plans matter more and shouldn’t be neglected if you decide to help your children financially. If you have a “boomerang kid” at home, developing a mutually agreed-upon financial plan can help them learn positive skills and safeguard your own financial well-being.