Downsizing with boomerang kids
All over America, many boomer-age parents are fretting. To fund their retirement, they must sell the big family house. But downsizing is impossible if one or more grown children have moved back home.
“The phenomenon of ‘boomerang kids’ has really upset lots of older folks who can’t roll with their plans because Junior has reclaimed the room he last inhabited in high school,” says John Rygiol, a real estate broker who specializes in the sale of upper-end property.
The migration of kids back to their parents’ property isn’t new in U.S. history. But it last became obvious to demographers during the recession that began around 2008. This was expected to be a temporary response to economic pressures, according to Frank Furstenberg Jr., a professor emeritus of sociology at the University of Pennsylvania.
But the trend has been anything but short-lived. According to U.S. Census Bureau data, more than 20 million young adults currently live in their parents’ home.
“People in the U.S. are marrying later, so the passage to adulthood is longer. But by age 25 to 29, there’s a huge dropoff in the number of young adults still living at home,” according to Furstenberg, whose research focuses on the changing nature of early adulthood.
Here are a few pointers for would-be home sellers with boomerang kids at home: • Don’t waver from your downsizing dreams.
Rygiol, who owns an independent real estate brokerage, says he’s witnessed many clients sacrificing their retirement security to maintain quarters for grown children.
“These kids are eating their parents’ lunch. Mom and dad shouldn’t have to sacrifice their retirement plans for the kids,” he says.
Of course, many young adults living in the family home are unaware of their parents’ financial situation. Nor do they grasp the full cost of owning and maintaining the family home. That’s why Rygiol suggests that an important first step toward your housing transition could involve a family meeting to outline these realities.
“Sit down at the kitchen table and explain the whole situation to your kids. Outline all your expenses for the big house and why you need to move to economize,” he says.
Once young adults realize how important it is for their parents to downsize and reduce costs, they’re more motivated to find their own housing solutions, says Rygiol, who’s affiliated with the National Association of Exclusive Buyer Agents (naeba.org). • Ponder the idea of a temporary rent subsidy.
Given how hard it is for many young adults to obtain a well-paying job, it can be a jarring transition if they’re jettisoned from the family home without sufficient funds to cover their own housing.
Should you help them pay to rent a place of their own? Rygiol says that might be a realistic way to proceed with your home sale without fear that your offspring could become homeless.
“If you can afford it, give the kids the equivalent of six months’ worth of rent for a modest apartment, plus the money to cover the security deposit,” he says. • Stay focused on protecting your retirement assets.
Many parents go to great lengths to provide every possible advantage for their children from birth through their college years. They expend hard-earned money for fancy birthday parties, music lessons, sports equipment and academic tutors. Some parents even cover the costs for their kids to study or travel overseas.
But by the time parents reach their late 50s or early 60s, many need to focus much more intensely on their own finances rather than on subsidizing their grown children.
“At a certain stage, people must get on with their own lives,” says Donna Goings, a veteran real estate broker affiliated with the Council of Residential Specialists (crs.com).
If you have a grown child or two living with you yet you need to downsize, it might be feasible for your offspring to remain in your next household for a short while, assuming you’ll have a spare bedroom there. But in that case, Goings says you should charge them at least a minimal level of rent, proportional to what income they can bring in.
Should you feel guilty about asserting your own need to downsize, even if that means your boomerang kids can’t go with you to the new place and must find alternative housing? Not at all, Goings says.
“The best thing you can do for your kids is to see that they get on their own two feet so they’ll develop the skills for independence,” she says.