The Boomerang Generation: Why your adult kid living at home is a retirement problem. Just not the one you think.

My kids are in elementary school. Some days I want them to live with me forever. Other days I am counting down to 18.

My parents probably felt the same way about me. Except I lasted six weeks.

In 2010, at 31, I took a job in Oak Brook and thought I had it figured out. Move back home for six months, save $16,000, and move out in the spring instead of January in Chicago. The math was perfect. The reality was six weeks of my mom asking where I was going, when I would be back, and why I couldn’t just work from the living room. I had been on my own for years. The part of me that wanted a driver’s license at 16 so I could go to Taco Bell by myself whenever I wanted could not handle it. I left.

So I get both sides. I would love for my kids to stay. I have also spent almost 20 years watching what open ended support does to otherwise excellent retirement plans.

The parents who say yes to an open ended boomerang are often the same parents calling me at 60. They need $40,000 for their kid’s business idea. Or the kid got divorced and needs to move back in. Or they are “temporarily” covering the mortgage on the kid’s first house while the kid gets on their feet.

None of these are emergencies. They are mission creep. And they quietly push your retirement date back, one reasonable yes at a time.

The Real Problem Isn’t That Your Kid Lives at Home

The real problem is that most parents have no guardrails. And a big income doesn’t fix that. I see it at every level.

One of my clients is a surgeon. Income well into the high six figures, net worth north of $3 million. Last year he told me his adult son had been living at home for three years. The original plan was 18 months. I asked what rent the son was paying.

“He’s my son. I’m not going to charge him rent.”

He also has a lake house he rarely uses, a 5,000 square foot primary home, and a boat. Any one of those is fine. Together, alongside an adult child whose costs never had a number attached to them, they add up to a spending pattern nobody has questioned in years. His target was 65. On his current path, he is looking at 72 or 73.

The son isn’t the whole problem. He is just the part that is hardest to say no to. And when you never say no to the hardest part, the rest of the spending follows.

Another client, a tech executive, set it up differently. Her adult daughter pays $1,500 a month in rent, chips in on groceries, handles her own laundry and car maintenance, and has a two year exit plan. They sit down every quarter to review it. The daughter is saving $30,000 a year. The mother’s retirement date hasn’t moved.

Same situation. Completely different outcomes. The difference isn’t love. It’s structure.

The Numbers

If your kid moved home, you are not alone.

In mid 2020, 52% of 18 to 29 year olds were living with a parent, the highest share Pew Research Center had recorded, topping the Great Depression era peak.¹ That has eased since, but in 2023, 18% of 25 to 34 year olds still lived in a parent’s home.² This is mainstream.

The reason is simple. A new grad making $45,000 a year can’t afford a one bedroom in most cities. Rent in mid priced metros runs roughly $1,200 to $1,800 a month before utilities, food, phone, and car insurance. Living at home can save a young adult $15,000 to $24,000 a year, more in expensive cities. Structured right, that is a down payment or a paid off student loan.

Now the side that keeps parents up at night.

A 2024 Savings.com survey found parents supporting adult children spend an average of $1,384 a month, about $16,600 a year, on things like groceries, phones, car insurance, health coverage, and housing.³ The median household income in that survey was $50,000 to $74,999. In the households I work with, the number is usually bigger. The car is nicer, the phone plan is premium, and “help with rent” is a condo.

Pew found 59% of parents with kids ages 18 to 34 gave them financial help in the past year.⁴ And a 2018 Merrill Lynch and Age Wave study found U.S. parents spend about $500 billion a year on adult children ages 18 to 34. That is twice the roughly $250 billion they put into their own retirement accounts.⁵

Read that again. Parents spend twice as much on their adult kids as they save for themselves.

The Retirement Math

Here is what this looks like for a household like the ones I work with.

A 55 year old couple. Household income of $500,000. $3 million saved for retirement. They contribute $70,000 a year and are on track to retire at 62.

Their 26 year old moves home. No rent. The couple covers the car and insurance, phone, groceries, health coverage, and a couple of trips a year. Call it $2,500 a month, or $30,000 a year.

To make room, they cut retirement contributions by $30,000. Over seven years at a 7% return, that is about $260,000 less at retirement. At a 4% withdrawal rate, that is roughly $10,000 a year of retirement income gone, every year, for the rest of their lives.

Or they keep saving $70,000 and pay the $30,000 out of spending. That means trimming somewhere else, working longer, or pushing back another goal, like a parent’s care or a renovation.

Either way, the cost isn’t $30,000 a year. It is the $30,000, plus everything it would have grown into, plus whatever it does to your retirement date.

What Done Right Looks Like

If you want your kids home after college, the question isn’t whether they should move out. It is how to structure it so everyone wins and your retirement doesn’t pay for it.

Put it in writing. Not a legal document. A simple agreement that covers:

•        Monthly rent or contribution. It can be $500 if the point is principle, not profit, but it has to exist.

•        What that covers: housing only, or housing plus utilities and parking.

•        Groceries, yes or no.

•        The household responsibilities they own.

•        The exit: a date, or a milestone like “when you have saved $20,000 for a down payment.”

•        What happens if they lose their job or hit a crisis. Decide that now, not when everyone is stressed.

Get your spouse to sign off too. If you are not aligned, you will relitigate it every month.

The tech executive? When her daughter moved out, the mom had set aside every rent payment and gave it back toward the daughter’s down payment. The kid learned what rent feels like. The mom protected her retirement. The rent was never about the money.

Model it against your plan. Add adult child support as a line item and run your retirement two ways, with it and without it. If the support pushes your date out more than a year or meaningfully lowers your plan’s odds of success, you can’t afford it in its current form. That isn’t stinginess. Your independence later is part of your kid’s security later.

Protect your retirement contributions first. If you are behind, don’t cut your 401(k) to fund your kid’s lifestyle. Help strategically instead. Match their rent payments into a savings account for them, or help with one big goal like student loans.

Set a cap. “We can support you for 18 to 24 months. Here is what we cover and here is what you cover. After that, you are on your own.” That isn’t harsh. It is clear.

Define done. A full time job. Three months of expenses saved. Finishing grad school. Pick something achievable. “Whenever you feel ready” means forever.

The Question That Matters Most

Am I doing this because I want to, or because I am afraid to say no?

One is a choice you can plan around. The other is how a retirement at 65 turns into a retirement at 73.

You can have your kid at home and your retirement intact. Run it like a plan, not a feeling: rent, contributions, a clear exit, quarterly check ins. Your kids will respect you more for expecting them to act like adults.

And for the record, the Taco Bell independence at 16 was worth it.

If you are weighing whether your household can afford to support an adult child, start by putting a number on the annual cost and modeling it against your retirement. That is exactly what a financial plan is for.

Sources

1.      Pew Research Center, “A majority of young adults in the U.S. live with their parents for the first time since the Great Depression,” September 2020.

2.      Pew Research Center, “The shares of young adults living with parents vary widely across the U.S.,” April 2025.

3.      Savings.com, Bank of Mom and Dad survey, February 2024 (reported by Fortune, March 11, 2024).

4.      Pew Research Center, “Parents, Young Adult Children and the Transition to Adulthood,” January 2024.

5.      Merrill Lynch and Age Wave, “The Financial Journey of Modern Parenting,” 2018.