Goodbye empty nest: young adults are moving back home
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If one or more of your adult children moved back home after graduation, your family is part of a widespread trend in America. People in their 40s and 50s who are caring for children and aging parents are known as the Sandwich Generation. According to a recent study by Athene, 76% of these Sandwich Generation parents report that they financially support their grown kids.
What's behind this societal shift? Some of today’s young adults may have different attitudes toward relationships and marriage, but economic factors also play an important role. As college loan debt and the cost of living continue to rise, moving back in with mom and dad may be a cost-effective housing option for many adults ages 18 to 34.
For parents who are supporting their adult children, our study found 82% are assisting with daily expenses and half say they are managing all or a portion of their child’s debt.
Even though respondents say more than three quarters of their kids have a source of income, they are still being relied upon for financial assistance. For parents who are supporting their adult children, our study found 82% are assisting with daily expenses and half say they are managing all or a portion of their child’s debt. While having all your family members back together can be a rewarding experience, it can sometimes disrupt your own financial plans like saving for retirement.
With their college years behind them, your children may be just entering the work force full time. If they’re open to guidance, they may benefit from a few tips you can share to help them get the most from their first post-college job. Remind them that this position does not have to be their dream job, but offers an opportunity to gain professional experience, earn a regular paycheck and possibly take advantage of other employee benefits.
Get on the same page financially
If you have an adult child living under your roof, one of the first things you should talk about as a family is money and creating a budget, followed by helpful ways they can boost their financial knowledge and money management skills . As you discuss a budget, look at all their expenses, from transportation and gas costs to phone bill and insurance coverage. Explain what strategies work for you when managing your personal finances and how a budget can help them make the most of their monthly income. To create a financial roadmap, encourage your child to make a list of:
- All of their financial obligations (rent, car payment, cell phone bill, student loans)
- Due date for each payment
- Amount of each payment
If there is room in their budget to start saving money for retirement, encourage your adult children to start a Roth IRA or contribute to an employer-sponsored 401(k). Financial experts know that retirement accounts started when people are in their teens or 20s can end up being worth much more than those started later in life.
Even if you’re covering a portion of their expenses, having a detailed list and timeline can make sure you’re on the same page financially. As you revisit this overview every six months, you can determine ways you can begin to lessen your contributions as they take on more financial responsibility.
Promote financial literacy
As your children begin to understand how to manage their personal finances and save for the future, the more confident they become in financial decision-making. Suggest different ways to improve financial literacy and adopt healthy money habits. Education is key to creating a strong financial foundation and a strategy for achieving short- and long-term goals.
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Jump-start financial conversations with your adult children. Take our Sandwich Generation quiz to get additional tips.
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While balancing your own financial obligations with that of your child’s can sometimes be challenging, the sooner you begin your discussions about expenses and expectations, the better you can be at preventing conflicts down the road. By working together, you may help your adult child learn to save money, pay down debt and work toward financial independence.
Want the most from your retirement? Get smarter with Smart Strategies from Athene. Your source for tips, tools and financial solutions that can help you live your best life.