Buzz
In a post-recession economy coupled with a stagnant job market, Millennials have become known as the 'boomerang generation.' We often return home to our parents, grappling with financial struggles while indulging in lifestyle choices like avocado toast. While this stereotype is overly broad, it’s true that 'boomeranging' happens—and if you're a parent to an adult child, or will be in the future, you may be curious about the financial impact of this dynamic.
A recent study by NerdWallet examined the financial costs of supporting an adult child, specifically in terms of how it affects retirement savings. The study revealed that:
On average, parents report that their adult children lived with them for a period of 4.5 years. Nearly 60% of parents with children aged 18 and older have hosted their adult children for over a year, while more than 20% have had them stay for more than five years.
Parents covering college expenses may be losing out on almost $80,000 in retirement savings. Over 25% of parents with adult children are currently paying or have previously paid for their children's tuition or student loan obligations.
Nearly 25% of parents saving for retirement anticipate that their children will financially support them in their retirement years. Millennial parents are almost twice as likely to expect this compared to Generation X parents (44% vs. 25%) and far more than Baby Boomer parents (5%).
They’ve also created a calculator to help you estimate the financial impact. By inputting information about your potential extra costs, like groceries, health insurance, and other expenses, the tool will calculate how much this would cost in terms of future retirement investments. You can check it out here.
