Bruce Helmer and Peg Webb
In today’s challenging economic climate, more adults are finding themselves returning to live at home with their parents, a phenomenon that requires careful financial planning for families.
According to a 2024 survey, 46% of parents have had their adult children (ages 18 to 35) move back in with them — a sharp increase from 35% in 2023. While such reunions can bring joy, they also come with financial strain and emotional complexities.
A recent survey conducted by Tracker Research revealed that about 27% of parents with so-called boomerang children admitted they were not financially prepared to support their children living at home as adults. This raises an important question: How can parents help boomerang children get back to living independently without sacrificing their own financial stability?
What’s behind the phenomenon?
Several factors contribute to the rising number of boomerang children — who have returned home after living independently after graduating high school or college. Among the most significant are economic challenges, job market fluctuations, and rising living costs.
According to the Tracker survey, 42% of young adults cite affordability as the primary reason for returning to their parents’ home, while 33% do so to save money. For others, convenience (32%) and the desire to be close to family (25%) play a role. While parents may welcome the chance to reconnect, they also worry about the financial strain and whether their children are losing opportunities for independence.
Setting boundaries and expectations
A successful transition begins with clear communication from the parents. Surprisingly, more than three-fourths of parents do not set financial expectations for their boomerang children. You need to openly discuss expectations regarding finances, household responsibilities, and the intended duration of your child’s stay.
Be sure to set a timeline and clear guidelines about how much financial support you can provide and for how long. Adult children should be encouraged to contribute financially to the household, whether through rent, groceries or utility bills. Negotiating these contributions upfront can prevent misunderstandings.
You also should consider drafting a written, informal agreement outlining the terms of the arrangement. This proactive step not only helps avoid conflicts but also encourages children to take their obligations seriously.
A critical red flag for parents is when a child remains at home past the one-year mark without clear progress toward independence. This can signal a need to reassess boundaries and expectations.
Safeguarding your own financial security
Before providing support, you need to evaluate your own finances. How much help can you afford to give without jeopardizing your retirement plans?
You should avoid taking on debt to support adult children and prioritize your emergency fund.
Once the boomerang child moves out, you need to reassess your financial situation. Any increase in monthly income surplus can be directed toward paying down debt, boosting emergency savings or adding to your retirement accounts. Maximizing 401(k) contributions and taking advantage of catch-up contributions to IRAs are excellent ways for you to bolster your financial future post age 50.
Helping children become financially independent
Parents play a vital role in equipping their adult children with essential financial skills. Teaching them how to budget, save and invest is key to fostering long-term independence. Adult children need to learn to manage their monthly income and expenses while keeping discretionary spending under control. They also need strategies to tackle debt, including student loans and credit cards.
If you choose to help pay down student loan debt, it’s wise to formalize the arrangement with a promissory note that outlines clear repayment terms. Consulting a tax professional is crucial to ensure compliance with IRS rules when lending to family members.
Beyond financial skills, parents should encourage their children to establish personal and professional goals during their stay. Assigning household roles and responsibilities not only lightens the load for parents but also fosters independence.
A balancing act for families
Supporting adult children at home is a delicate balancing act that requires thoughtful planning and open communication.
As parents, it’s natural to want to help your children navigate the economic challenges of today’s world — rising living costs, job market fluctuations, and expensive housing. But ensuring your own financial health is just as important. That’s why we often recommend that parents in boomerang situations consult with a knowledgeable financial professional to help provide clarity on balancing family support with personal financial goals. By creating a well-thought-out plan, you can support your children without sacrificing your future, fostering a sense of independence and security for the whole family.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.
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