Remember when we Baby Boomers grew up and knew that when we turned 18, we would be on our own financially? We either got a job or went off to college and basically left the nest. Of course, we went back home to visit and to sleep in our childhood bed. But we didn’t move back in.
Well, that doesn’t seem to be the case in today’s world. According to a study conducted by Savings.com, many adult children return to the “empty” nest, and almost half of all adult children rely on their parents to help them financially.
Not a walk in the park for parents
The Savings.com study also revealed that the parents helping out their grown children contribute “more than twice what the average working parent contributed to their own retirement savings monthly.” On average, parents are giving their kids about $1,384 per month, or nearly $17,000 per year. This means that parents are sacrificing their own financial security.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Don’t worry about suffering from empty nest syndrome
You might have dreaded the day when the kids were gone and a quiet came over the house. You could have asked yourself: How will we cope with an empty nest? But you might have conversely felt satisfied that you instilled the values and life skills for your kids to enjoy their own financial independence and now could make their own life journey in the world. Your job was done; the kids were baked.
Well, fear no more. According to Pew Research, about half of adult children ages 18 to 29 had returned to the empty nest in July 2022. They seem to be only half-baked.
Did we do this to ourselves?
Many parents, and frankly schools, have not prepared kids to be financially independent. Gen Zers scored the lowest in a 2024 financial literacy study conducted by TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business. They flunked the financial test, answering only 37% of the questions correctly. Let’s not just shame that generation — all the other generations also flunked this test.
We all know that money skills are vital, but often they are neither taught in schools nor at home. This frustrated me, so I did something about it and created the topic of teaching kids about money in 1988 when I opened The First Children’s Bank and wrote The Kids’ Money Book. I later created the first money curricula for kids.
Today, only 35 states require students to take a course in personal finance to graduate; we are still not doing enough to prepare our kids for the real world.
Not so easy for our kids
But this generation of young adults have also been hit with financial hardships. They are carrying an average of $37,000 in federal student loan debt. COVID caused them to lose jobs. Inflation meant higher prices for rent, food and partying. CreditKarma reported that 32% of Zoomers (aka Gen Zers) spend half of their monthly income on housing. Their credit card debt is also mounting.
To be fair, of the adult children who are supporting themselves, 66% said that their parents did help to prepare them to be independent, according to Pew Research Center. But the majority is not prepared for their financial future. A Goldman Sachs survey found that 34% of Millennials feel behind with their retirement savings but still expect to retire between ages 60 and 64. Again, all the generations reported being behind in their accumulated savings.
The result for many adult kids: move back to Mom and Dad’s.
Hotel Mom & Dad: How to avoid the generational collision
If your grown offspring (temporarily) fails at the American Dream, we are parents, and the door is always open. You are their rock; I get it. It’s tough, because now they are adults, but they may think of themselves as children who are used to you doing all of the chores and paying for everything. You love them, but you still need to set down some guidelines so that the situation is workable and doesn’t explode.
I recommend that you have a conversation about house rules and responsibilities. I’m not being harsh; it is your house, and misunderstandings can easily take place. Expectations also need to be explicitly discussed and memorialized. That leads us to the lease.
Why draw up a lease?
The lease discussions will open up frank conversations about responsibilities. The point of a lease is to lay out rules. For instance, you may just assume that your kids will contribute to the extra expenses that you are incurring by having them back home. They may not — according to the Savings.com survey mentioned above, a whopping 61% of the adult children returning home don’t contribute to any household expenses, including rent.
Here is a brief list of questions that you, as the landlord, need to ask yourself first, then discuss with your offspring:
- Should your adult child pay rent?
- How much rent should your child pay?
- Should the lease be for a specific time period? When do they plan on moving out?
- How do you divide utilities?
- What household chores are the responsibility of your child?
- Is your child allowed to use your car? Who pays for gas, maintenance and insurance?
- Is your child allowed to have pets? Who takes care of them?
- May your child use your groceries, or do they have to shop on their own? Who makes the lists, and who pays?
- Who prepares the meals?
- Does your child need assistance in setting up a workable budget, taking all obligations, such as student loan debt, car expenses, health insurance, etc., into account?
The last step is to write out the lease with the mutual decisions.
You want your kids to experience financial independence, which is true financial freedom. That really is the ability to live the lifestyle they want without having to depend on anyone else … especially you.
Related Content
- Can’t Afford It? There’s No Shame in Saying So
- 529s: No Longer the Ho-Hum Investing Device for College
- Are You the Worst Money Role Model for Your Kids?
- Three Ways to Give to Your Kids Tax-Free While You’re Still Alive
- Three Ways Parents Can Transfer Wealth to Help Their Kids
-
Stocks Bounce But End With Big Weekly Losses: Stock Market TodayThe stock market rout continued on Friday, but a late-day burst of buying power brought the main indexes off their session lows.
-
More Than 1 Million Toyota, Lexus and Subaru Vehicles Recalled for Camera Issue. Is Your Vehicle Affected?A software glitch in the Panoramic View Monitor system causes blank or frozen rear-camera images, triggering a massive recall of 2022-26 models.
-
A Financial Planner's Guide to a Stress-Free Adventure AbroadStart by looking at flight/accommodation costs, have a flexible schedule, seek out credit card rewards, prep for health issues and plan to cook your own food.
-
I'm a Financial Planner: This Is How Smart Women Can Plan for Financial Freedom Despite Life's CurveballsProactive planning and professional guidance can help to build your confidence and give you clarity when you're navigating major life transitions.
-
Parents and Caregivers: Don't Miss Your Roth Conversion WindowCaring for a child or parent can mean a drop in income and a lower tax bracket. Why not take advantage by moving money into a Roth account? Here's how it works.
-
Testing the Retirement Waters in Florida? A Partial Plunge May Negate Tax BreaksMost folks know Florida is a tax-friendly state, but they might not know that part-time residents may not qualify, as our cautionary tale shows.
-
Catch-Up Contributions for Higher Earners in 457(b) Plans: What You Need to KnowGovernment 457(b) plans are about to get more complex as new Roth catch-up requirements come into force. Here's how to prepare for the changes.
-
I'm a Financial Planner: This Is Why Commitment, Not Perfection, Drives Financial SuccessMeeting your goals is more likely if you stick to your strategy despite market volatility and scary headlines. Consistency makes a difference.
-
I'm a Financial Professional: This Is Why Now Is the Time for Investors to Look AbroadExtreme U.S. market concentration has made international equities not just a diversification play, but a timely opportunity.
-
Four Ways to Make the Most of Your Benefits During Open EnrollmentOpen enrollment is a chance to make sure you're getting every ounce of value from your workplace benefits and on track to reach your long-term financial goals.
