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Adult Children, Who Move Home, Earn Keep

Fueled in part by the sluggish economy, boomerang children are moving “back home” to shore up their balance sheets. The good news for their parents’ retirement finances is that large majorities say they are helping to defray at least some of the household expenses.

That is one of the findings of a new survey of 2,048 adults nationwide by the Pew Research Center. According to Pew, slightly more than 20% of 25- to 34-year-olds live in multi-generational households, up from 11% in 1980. The recession accelerated the trend:

  • Among  adults ages 18 to 34, 24% moved back in with their parents in recent years, after living on their own, because of economic conditions.
  • Among adults ages 25 to 29, 41% live with or moved back in with their parents.
  • Among those ages 30 to 34, 17% fall into this category.
  • Nearly half (48%) of adults ages 18 to 34 who are not employed either live with their parents or moved in with them temporarily because of economic conditions.

About 75% of boomerang children report that the living arrangement has been positive or neutral for their relationships with parents, with 44% saying they are satisfied with their housing situation.

Interestingly, “parents who say their adult children have moved back in with them are just as satisfied with their family life and housing situation as are those parents whose adult children have not moved back home,” the report says. While the survey doesn’t get to why, the following may provide an explanation:

  • Nearly all of the 18- to 34-year-olds surveyed (96%) say that they do chores around their parents’ house.
  • 75% say they contribute to household expenses such as groceries or utility bills.
  • More than a third (35%) pay rent to their parents.

Before setting up an extended household, advisers say a family should devise a financial plan that works for all parties. Often, a simple written agreement is enough.

  • Those who prefer a temporary arrangement should work out an exit strategy—for example, by estimating how long it will take a person experiencing financial problems to regain his or her footing.
  • In many cases, it is a good idea to charge rent–if only to prevent the parents from sacrificing their retirement savings to float a child.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.