When adult children move back in with their parents, it causes a lot of cultural anxiety. We call them moochers or spongers. We say they’ve failed to launch.
But a recent working paper from the National Bureau of Economic Research should put these fears to rest. Grant M. Seiter, Mary J. Lopez and Sita Slavov looked at how adults aged 51 to 69 fare when their adult kids return home. Remarkably, it finds there’s no impact on a parent’s wealth.
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The main reason is that most of the moves back home are short-term, often the result of an unexpected shock, such as losing a job or getting divorced. The adult kids move out again when they get back on their feet.
Headship rates, which measure the ratio of households to adults, reinforce the idea that most returns to the nest are temporary. The kids who boomerang home boomerang right back out again.
During the height of the Covid-19 pandemic, there was a steep decline in the headship rate, which means fewer young adults formed their own households, according to research from Federal Reserve economists Daniel Garcia and Andrew Paciorek. But as of March 2022, the headship rate for people under 30 had recovered from much of its dip.
It was a different picture after the Great Recession, when the headship rate for young adults persistently stayed a couple of percentage points below where it had been in the early 2000s. In practical terms, that means several million more adults were cohabitating with their parents long-term.
But even that didn’t seem to be much of a problem. The NBER paper, which looked at responses to a survey given every two years from 1992-2014, found no significant statistical evidence that adult kids moving back home had a negative impact on their parents’ wealth, hours worked, health or life satisfaction — even in the aftermath of the Great Recession.
Going farther still, sometimes kids moving back home can actually make parents better off. The NBER study acknowledges that some adult children may move home to take care of parents dealing with a health shock. Others may help out with chores and responsibilities, or even contribute to household expenses if they have the means.
Still, there are caveats. The NBER paper looks at adult children who boomerang home, so their parents must have been relatively financially secure in the first place for that to even have been an option. And maybe only parents and children who have a good relationship would consider it.
It also focused on relatively young adult children, with the average age in the sample being 25. It’s hard to know for sure, but older children returning home might be more likely to come with children in tow, which could impact finances more — or even accelerate the decision to stop working to help with child care.
Finally, there was one group for whom a child moving back home seemed to have an effect. Men under the age of 62 in the top half of the wealth distribution with a boomerang child said they thought they might be more likely to work full-time past 65.
According to Seiter, a senior research associate at the American Enterprise Institute, it’s a bit of a tenuous connection since the men were anticipating a change several years away, probably long after a child had moved out again. Plus, they didn’t report any difference in their wealth.
When I gripe about potty training a toddler, my friends with older kids will sometimes reply, “Little kids, little problems … big kids, big problems.” Baby boomers’ adult children may be dealing with big problems when they move back home, but it seems that temporarily cohabiting can help everyone get through a tough time.
In other words, as long as your adult children don’t become permanent fixtures around your house, you’ll all probably be fine.
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