Since the 2008 economic crisis, some families may have moved in together to combine expenses. Families may have faced job loss, underemployment or overwhelming debt that forced them to decrease their expenses and move back home. This could come at a sensitive time for aging parents as they face retirement or may already be living on a limited income.
When adult aged children move back home with their parents it may cause some financial strain for aging seniors. According to Kirsten Grind, writer for the Wall Street Journal, “Financial advisers say hosting an adult age child back at home can cost between $8,000 a year to $18,000 a year, depending on how much parents are shelling out for extras like travel and entertainment.”1
A recent study by the National Endowment for Financial Education shows that a full 50% of parents who are supporting their adult children in some way are providing housing.2 Before adult children move home, it may be a good idea for parents to thoroughly assess their financial situation to be sure it’s something they can afford.
It may also be a beneficial for everyone if some ground rules are agreed to before the children move in. The following tips may be helpful:1
- Set a Deadline to Find Work– If an adult child is looking for a job, it may be helpful to set a goal for what date this should happen by.
- Pay Rent- Adult kids could pay weekly or monthly rent in an amount that both the parent and child are comfortable with.
- Pay Bills- If the adult child is still working or receiving some kind of income, they could help out with the utility bills since more people living in the home will cause utility costs to increase. The child could also be responsible for a portion of the groceries or gas, if vehicles are shared.
- Know the Boundaries of the Relationship- Discussing household chores and who will be responsible for what can help ease the transition.
If parents are financially able to help support their adult children during a difficult time, it’s likely that most would do so. However, it is also important for the parents to protect their own financial future.
If you are planning to retire soon, it may also be beneficial to speak with a financial or retirement advisor. If you are looking for a way to supplement your retirement income, are age 62 or older and have sufficient equity in your home, a reverse mortgage loan could be the financial answer to free up an additional source of cash.
To speak with a reverse mortgage advisor for more information about reverse mortgage loans and eligibility requirements, call 800.976.6211.