Boomers Beware: Are Your Millennial Kids Draining Your Retirement Savings?

The question of whether parents should charge rent to their adult children living at home has sparked a heated debate. As the cost of living continues to rise and the economic challenges faced by younger generations become more pronounced, many parents find themselves caught between supporting their children and encouraging their independence.

According to a Harris Poll for Bloomberg, nearly half of young adults in the US currently live with their parents. The reasons behind this trend are multifaceted, including skyrocketing student debt, a scarcity of affordable housing, and a competitive job market that has made it increasingly difficult for young adults to achieve financial independence. 

Parents like Kori Shafer, a commercial insurance producer in Craig, Colorado, want to help their children transition into adulthood. However, in an interview with Bloomberg, Shafer expresses concerns about enabling her stepson’s spending habits, such as his $900 monthly expenditure on a sports car, while he claims to be saving for a house. This situation highlights the fine line parents must walk between supporting their children and inadvertently hindering their growth.

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The pandemic has further complicated the issue, normalizing living with parents and altering the traditional timeline of adulthood. Parents are now spending an estimated $500 billion annually on their 18- to 34-year-old children, according to a Merrill Lynch and Age Wave study. This is double what they contribute towards their own retirement, leading some parents to deplete their savings and even dip into retirement funds. 

The perception of living with parents has shifted over the years. For boomers, moving back home was often seen as a failure, but now it is viewed as a pragmatic way to navigate a challenging economic landscape. However, this shift in mindset can be difficult for parents who were raised with values of independence and self-reliance.

While some parents, like Erika and Cody Archie, have resorted to charging a modest rent to offset increased costs, others are reaching their breaking point. Shafer, for example, has set a deadline for her children to move out, marking her own “independence day.” The decision to charge rent or provide support is a personal one, influenced by a family’s financial situation, values, and the specific needs of their adult children.

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