More Parents Reducing Support Of Adult Children, Thrivent Says

The real tragedy of boomerang kids isn’t that young adults start late out of the gate, but that their parents put off their own future needs in order to assist, said Alex Gonzalez, a financial advisor at Thrivent who has dealt with his own boomerang kid.

But many parents have hit their limit, he said, and have either withdrawn or scaled back financial assistance to their "boomerang kids."

A new survey from Thrivent backs up that view, finding that 45% of parents say they are scaling back their financial support of adult children, up from 39% when the same survey was conducted last year.

Also, 46% of parents report adult children between 18 and 35 moving back home, continuing a trend that has been going on for decades.

With that, 38% of parents say their long-term financial goals, such as saving for retirement, have been impacted, and 39% say their  short-term goals, such as vacations, have been impacted.

“There needs to be some candid conversations between the generations because the kids [have] more time than mom and dad,” Gonzalez said. “Mom and dad are closer to retirement. They have fewer working years ahead of them to make progress on their goals.”

Sometimes it can be as straightforward as going over the basic household bills for water, electric, gas, garbage collection, internet and others.

“It's facts, it's data. You show them that information, so that there's not really much decision-making or guilt or anything like that,” he said. “The next  step is, ‘OK, what are you going to contribute?’ And that's where things start to get a little bit more challenging for some households.”

Some of the economic trends that are making it hard for young adults to live on their own, such as the rising costs of groceries and utilities, also affect parents.

On the other side, 60% of young adults say their parents haven’t shared how their financial lives are being affected by a boomerang kid.

“I think there's a fair amount of hesitancy of discussion of money between generations. And another reason it’s not easy is because a boomerang is due to some sort of life change that doesn't follow the typical adult child launching trajectory,” Gonzalez said. “So there's some level of disappointment one way or the other, but life happens.”

The survey found that 20% of boomerangs are due to personal events like divorce or separation. What happened in the Gonzalez household was the pandemic, he said.

“Covid threw off a lot of plans for every generation,” he said. “Of course, I've told my kids about managing money and have communicated about it to a certain extent. Not shared where the decimal point is, but definitely covered some concepts.”

Gonzalez and his wife agreed they would support their kids by not charging them rent, since their staying at home in bedrooms that would otherwise be empty didn’t affect Gonzalez’s financial plan. But they did insist that the kids take what would have been rent money and put it into a savings account to eventually help them move out. And the children would also contribute to households expenses that were increasing because of their presence, like groceries and utilities.

“Every family is different. It’s important to communicate we're not perfect, but this is where things stand with us and really let that sink in,” he said. “So let's say the parents they have to put off their retirement. So instead of retiring at 65, now they have to retire at 70. Well, who's to say that their health is going allow them to continue to work until 70? So until mom and dad feel the urgency and the weight of that, they’re not going to have enough incentive to have that tough love conversation.”

The survey was conducted in March and polled 2,190 households. 

Source: https://www.fa-mag.com/news/more-parents-reducing-support-of-adult-children-82480.html

Written by: Jennifer Lea Reed