Living with Parents: The New Normal for Young Adults?
In the past, living with one’s parents in adulthood could mean a lot of things, many of them with negative connotations. Now, it’s becoming not only a more regular occurrence, but in some cases, a financially savvy move. There’s even a catchy nickname for these young adults who return to the nest: “boomerang kids."
The New Normal
To say that more and more young adults are living with their parents would be an understatement. In fact, the Pew Research Center recently found that for 18-to 34-year-olds, living with parents was the most common living arrangement. This is the first time such an arrangement has been the most popular in over 130 years.1
Previously, cohabitation with a romantic partner reigned as the most popular. However, as the survey notes, “this turn of events is fueled primarily by the dramatic drop in the share of young Americans who are choosing to settle down romantically before age 35."
Similarly, for those professionals who have found employment, they’ve also found lower pay. Pew writes: “young men’s wages (after adjusting for inflation) have been on a downward trajectory since 1970 and fell significantly from 2000 to 2010. As wages have fallen, the share of young men living in the home of their parent(s) has risen."
But the employment and wage issue is not exclusive to men. Nicole2 says she “lived at home till my early 30s. I only left when my mother sold the family home for a considerable sum.” Working in film production, Nicole says she “was only employed about eight months out of the year.”
Additional Contributing Factors
This isn’t just about young (or not-so young) love, though. Rents across America have been on the rise, while more and more college graduates (with Bachelor’s degrees) are having trouble finding jobs.
In 1960, Pew found that 84% of men between the ages of 18 and 34 were employed. That was when the statistic was at its highest. Compare that to 2014, when it fell to 71%. "Employed young men are much less likely to live at home than young men without a job, and employment among young men has fallen significantly in recent decades,” reports Pew.
Not All Bad News
With rents on the rise, and averaging $992 nationally, being a “boomerang kid” may be a smart move for young adults. Assuming they don’t contribute to their parents’ rent or mortgage, it’s a savings of nearly $12K per year, plus more savings when utilities are factored in.3
For these “boomerang kids,” the idea of living with their parents is not a permanent one. Rather, it’s a way of positioning themselves for more success when they do leave the nest. For Nicole, living at home gave her a chance at succeeding in her chosen field. “The greatest advantages for me were the ability to pursue a freelance career in a creative field that had spotty payment schedules.” Nicole is now a homeowner, though she notes that didn’t happen directly after she moved out: “I went to a rental with another family member for about a year as I had to scramble to a) find a place I could house my aging large dog; and, b) get regular work. After that I was in a single-bedroom basement rental and from there to my current home, a purchased property.”
What About The Parents?
The job market and wages are tough on kids, so they’re moving home—and maybe making the most of it. But what about the parents? Especially if they’re living in the same house, it may not seem like that much of an added expense to have a child move back into their old bedroom. But the data suggest otherwise. Having a child move back in can cost their parents between $8,000 and $18,000 per year, according to some estimates.4
As such, parents are worried about the financial toll their children may take on their budget, and if it will take away precious dollars from their retirement accounts. And, of course, they’re concerned about how to best treat their children: Will letting children move back in help them? Or will it only serve to coddle them, making them ill-prepared for life on their own?
So real are these concerns that one can find specially designed lease agreements for parents to use when their children move back home, which address time horizon, financial obligations, and other household duties.
Like many others, Nicole contributed in financial and non-financial ways as a way of offsetting any burden she was putting on her parents by living with them. “I did contribute a nominal amount [of money] when I could...I did buy/cook groceries a great deal for the family members still living at home. One of my older brothers had also remained. In lieu of money in the times I was short...I did most if not all of the maintenance around the house. Yard work, cleaning... I cooked most meals, cared for the pets and so on.”
For some parents, all of this may be, in some ways, comforting. Dropping off a child at college and waving goodbye can be heartbreaking, and the “empty nest syndrome” can be a truly difficult thing to cope with. So knowing that college does not necessarily spell the end of living at home may not be a purely worrisome thought. But whatever a parent’s views on the issue might be, knowing the costs and practical realities associated with an empty nest becoming once-again full can help families make the most informed decisions, and any transitions a little smoother.
This article is not an endorsement of any particular product, service or organization; nor is it intended to provide financial, tax or legal advice. It is intended to promote awareness and is for educational purposes only.
1 Source: Pew Research Center. For First Time in Modern Era, Living With Parents Edges Out Other Living Arrangements for 18- to 34-Year-Olds, Richard Fry. May 2016.
2 Names have been changed to protect privacy.
3 Source: Department of Numbers. US Residential Rent and Rental Statistics. 2015.
4 Source: The Wall Street Journal. Mother, Can You Spare a Room? Kirsten Grind. May 2013.