Welcoming an adult child home after college graduation is a shift more middle-age Americans will face as their kids, pressured by student loan debt and rising living costs, return to their childhood homes. More than 15% of 25-to-35-year-olds lived at home in 2016, according to The Pew Research Center, 5 percentage points higher than the previous generation.
Supporting an adult could add to the challenges facing a generation of parents struggling to save enough for retirement, experts say.
“When it comes to paying for extras –– spending money, weddings or a home down payment –– parents can do it, but it probably will have ramifications on their retirement,” says Joel Bird, a certified financial planner at Legacy Financial Partners.
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The real danger of having a young adult at home is if your generosity includes benefits you covered when they were teenagers, including a cell phone, spending money or car insurance.
“Don’t subsidize your kids,” O’Neill says. “It comes down to that.”
More than 50% of parents cover at least a portion of their adult kid’s phone expenses, according to a recent study by Merrill, Bank of America’s wealth management arm. And more than 70% say they’ve put their children’s needs ahead of retirement savings.
If you’re already covering extra costs, cut the support slowly, O’Neill says. And make sure your bills don’t increase with one fewer person on a plan, since family plan rates are often pegged to the number of members on the plan.
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