Ground Rules for Boomerang Children

You may have heard about "boomerang children," which refers to this generation's proclivity to flee the nest, only to return a few years later like a boomerang.  A recent report from Pew Research has quantified the power of the boomerang generation: for the first time ever, more young adults are living with their parents than with a spouse or partner. In 2014, 32.1 percent of adults, ages 18 to 34, had returned to their parents’ home, while 31.6 percent were residing with a spouse or partner in their own household. This is quite a turnaround from 1960, when 62 percent was living with a spouse/partner and just 20 percent with their parents. The trend is tied to a few factors, one of which is postponement of marriage. The median age of first marriage has risen steadily for decades, as many couples live together before walking down the aisle. Still, many more Americans are eschewing the traditional coupling arrangements seen in the past -- the overall share of young adults either married or living with an unmarried partner has substantially fallen since 1990.

If postponement of marriage is one factor, so too is the economic reality that many families have faced over the past decade. The severity and length of the recent recession caused adult children to flounder and many had to take lower paying jobs than they had expected when they were in school.

Even now, as college graduates are enjoying the best job market since the recession, many are choosing a more financially prudent life, where they can accumulate assets, pay down debt and secure their financial futures. Most parents would applaud such parsimony; but the reality of having the kids return home is not always the easiest transition for the older generation.

Communication is key - parents need to outline their expectations. Will your child do housework, contribute to groceries and bills, and pay rent while living home? How long will the arrangement last? If the child is unemployed, what must he do to show that he is actively looking?

For the child, it is tough to feel like you have any say in this situation, but you must discuss your concerns. You are an adult now, so remind your parents that you will behave like one and hope to be treated as such. One friend tried to impose a curfew on her 24-year-old daughter, harkening back to the old “My house, my rules!” mantra. Guess how well that went over with the younger generation?

After both sides openly and honestly discuss the ground rules, agree to revisit the plan in three months. There obviously can be some flexibility, but to make sure you are both on the same page, put the agreement in writing.

Finally, I found some tips from The American Grandparents Association, which provided a few terrific reminders for multi-generational households:

1. Make room. It’s not the amount of space, but the respect for independence and privacy. Make sure all members of the family have a spot they can call their own where they won't be disturbed.
2. Make Time. Some families hold regular meetings, others leave notes/text. Whole direct, face-to-face contact to catch up each day is preferable, there are many ways to stay connected – just agree what works for your family.
3. Treat your family like your friends. You treat your friends with patience, listen to what they have to say, provide advice/feedback only when asked and you give them the benefit of the doubt. Try to treat your family with as much consideration and multigenerational living will go much more smoothly.

Are Greedy Kids Raiding Your Retirement?

“Greedy adult children have become rapacious consumers of their parents’ money!” Those are the stinging words of financial planner, author and speaker Jonathan Pond, who worries that millions of Baby Boomer parents have indulged their children, at their own expense. Of course he was not talking about your kids—your kids are perfect little angels! Although the economy is well into the recovery phase, nearly 63 percent of American families are still providing financial support to their adult children, according to research from insurance and financial services trade association LIMRA. Parents most often pay for their adult children’s cell phone bills, rent, student loans, car loans, credit card bills and even vacations. A separate study last year by the nonprofit American Consumer Credit Counseling found that a higher proportion of U.S. households provide financial assistance to adult children than support for elderly parents.

These numbers may be startling in and of themselves, but it is the next part that makes financial planners nervous: of those parents helping their adult children, 45 percent say it is hurting their retirement savings. Deb Dupont, associate managing director of LIMRA says parents “are providing considerable support to their children at a time in their lives when saving for retirement should be a priority.” Of course these parents know that they should be focusing on themselves, but doing so can be a tangled emotional ride.

Take the case of Joan, a 55-year-old widow, whose 31-year old daughter Mindy went through a nasty divorce and lost her job in 2012. Joan was more than willing to have her daughter move in and she even helped out with some expenses. But three years later, her daughter is creating difficult financial choices for Joan. While Joan would like to concentrate on retirement, she is worried that Mindy will not be able to make it on her own. “I was trying to retire by age 65, but that’s probably not going to happen now. It’s hard for me to draw the line with my daughter.” Unfortunately, Mindy has gotten a little too used to this “temporary” situation and is not clamoring to become financially independent any time soon.

The steps necessary to wean an adult child off of a parent’s gravy train require tough and often emotional conversations. Ideally, Joan would have had “the talk” before Mindy moved in, but that never happened. Now it is important for Joan to discuss her needs and expectations going forward. Maybe something like, “It’s been three years since you moved in and I was happy to help you out during this major transition in your life. But I think that you are more than capable to take control of your financial life and I want to help you develop a plan to help you get there.”

As Joan works on the plan with Mindy, she will likely have to ease her into full independence. That might mean that if the goal is to have her move out in six months (she must choose a concrete date), she will have to develop a budget, which winds down the payment of expenses over time. Joan should reiterate that she will help guide Mindy through the process, but not to finance it. While she’s having these difficult conversations, Joan should also define when it's appropriate to ask for help in the future (a medical crisis or a job loss), but it must be an emergency, otherwise she risks getting caught up in the cycle again.

To accurately reflect the agreement, the plan needs to be in writing, it should be specific and both sides need to stick to it. I’m not saying that you shouldn’t help out your children in need, but you should be smart about the financial assistance you provide. Financial independence is a marker of adulthood - help and generosity differ from unhealthy dependency.

Baby Boomerang Nation

After my grandfather died, we were gathered at his home in Florida for a small ceremony. I knew most of the people there, but I remember overhearing one snippet of a conversation that made me burst out laughing. Imagine an elegant woman, aged 101, fully ambulatory and with all of her marbles. This was one of my grandmother’s dear friends, Bertha. As we are waiting to begin the service, another woman breezes in and approaches Bertha, at which point Bertha exclaims, “You wore THAT to a funeral?” I turned to my grandmother and asked whom the younger woman was. “Oh, that’s Bertha’s daughter. She’s 85 and Bertha never likes what she’s wearing!”

Sometimes the relationship between parents and children can get stuck in a negative feedback loop. Neither side intends for this to occur, but those old patterns are hard to break, even as we get older. Imagine how difficult it would be if adult children and parents had to live together!

I thought about Bertha and her daughter when I read a recent study from the UCLA Center for Health Policy and Research, which found that older adult children are moving back into their parents’ homes at an alarming rate. This is a continuation of a recession-era trend that was labeled “Boomerang Kids,” adult children who left the nest for a period of time, only to return to the fold for financial reasons.

But the trend has continued during the slow economic recovery, forcing many adult children home. According to the study, more than 2.3 million adult children in California were living with their parents in 2011, 63 percent more than in pre-recession 2006.

As you might expect, young adults (18-29) saw a big 56 percent increase from 2006 to 2012, but hold on to your hats, Baby Boomers: there was a 67.6 percent increase in adult children ages 50-64 moving back in with their parents. The UCLA study indicates that the latest permutation of the trend is Baby Boomerangs!

"A college degree is no guarantee of a job today, and an unprecedented number of families have been forced to return to a multi-generational household," said Steven P. Wallace, associate director at the UCLA Center for Health Policy Research and a co-author of the study. "Until the economy provides the kinds of jobs that allow all adults to be self-sufficient, families will need help."

These multigenerational family living arrangements are often the only option for the younger generation, but it can crimp the older generation’s lifestyle, increasing household expenses by 50 percent or more for many families.

“What’s a mother to do?” asked my mother when we discussed the trend. This was the most common reaction when I asked a number of parents about the idea of their 50-something children returning home. “I’d do what I would have to do…it’s my kid!”

That’s all well and good, but what are the logistics of these arrangements? Any potential move requires a tough conversation, where both sides understand what they are about to do and what the expectations are. Some of the questions to cover include:

• Can the children contribute to household expenses and if so, to what degree?
• Will this be a temporary or permanent living arrangement?
• If permanent, it may be necessary to communicate that fact to other adult siblings and perhaps to make adjustments to estate documents, which would make other siblings “whole” with other assets from the estate.
• What happens when the older generation dies--will the adult children remain in the house?
• What will happen as the parents’ age? What if they need the equity in their home to move to a different residence or an assisted living facility?

Parents are always going to help their children in need, regardless of age, but all families need to be smart about the financial assistance provides and discuss all aspects before entering into the arrangement.