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Boomerangers: When the Chickadees Return Home To Roost

That first summer after they graduate from college. When
they get laid off. After a divorce. There are plenty of times in life when
adult children, albeit reluctantly, move back in with their parents until they can
get on stronger financial footing.

Unfortunately, this has a way of happening right about the
time when parents may no longer have such financial obligations as college
bills and auto loans, and maybe even have paid off the mortgage. It’s the time
when they may be in higher earning years and can finally start socking away a
larger portion of their income for retirement to help make up for any lost

Then suddenly, the food and utility bills are higher, and they’re
also paying for these “boomerang” children’s health and auto insurance, student
loans and maybe even their cell phone bill. It can be difficult to teach
financial responsibility to adult children when they may be at their lowest

If this is your situation, you can’t let your adult children
negatively affect you, financially. It’s important that you preserve your
assets and keep up with your savings goals. If we can help you figure out ways
to adjust your budget to accommodate boomerang kids or explore insurance
options for helping you meet your retirement income goals, please give us a

A recent Bankrate survey found that half of parents are
sacrificing their financial goals to help out adult children — and that’s not
exclusive to the ones who move back home. This alarming trend also prevents
many near-retirees from downsizing to achieve savings in housing-related costs,
including big-ticket expenses like property taxes, homeowners insurance and
ongoing maintenance costs.1

Some of the more common suggestions for managing boomerang
kids are to set deadlines for how long they can stay; put benchmarks in place
for when you expect them to start paying their expenses, including rent; help
with their transition to adulthood if necessary; and, if you can’t, let your
financial professional be the “bad guy.”2

Today, about one-third of the millennial generation lives at
home with their parents, with an average stay of three years. If you think that
indicates a lazy generation, you might want to think twice before judging too
harshly. While the last recession posed a difficult time for baby boomers and Generation
X, it was hardest on millennials, many of whom were just starting out in
adulthood. The economic setback set them back as well. As a result, the net
worth of today’s young adult is half what it was for baby boomers at that age,
and wages are 20% less on an inflation-adjusted basis.3

As for homeownership, widely considered the most common
means of growing wealth, millennials clearly lag there as well. The rising cost
of residential real estate, the shortage of available homes on the market and large
amounts of student debt have proved to be a real game-changer for young
homebuyers. In fact, the median age of first-time homebuyers in 2019 was 33, up
from 29 in 1981, and the median age for second-time homebuyers is even more
surprising: 55, up from age 36 in 1981.4

If you want to help your adult child but want him to have
more independence, consider opportunities to give him a place to live that may
also benefit you in retirement. You can do this by buying a small rental unit
or even building a tiny home on your property, assuming you have the room. Many
states are setting up ordinances for what they term “auxiliary or accessory
residential units (ADUs).” These are smaller homes on your property that can serve
as a guesthouse, in-law apartment, residence for a caregiver — or temporary
housing for your boomeranger.5

Content prepared by Kara Stefan

1 Ron Carson. Forbes. Aug. 11, 2019. “Five Ways To Keep
Boomerang Kids From Ruining Your Retirement.” Accessed Jan. 15, 2020.

2 Rodney Brooks. U.S. News & World Report. May 24,
2019. “Don’t Let Boomerang Kids Endanger Your Retirement.” Accessed Jan. 15, 2020.

3 Amica. 2019. “When Adult Children Move Back Home” Accessed Jan. 15, 2020.

4 Jessica Lautz. National Association of Realtors. Jan.
13, 2020. “Age of Buyers is Skyrocketing…But Not for Who You Might Think.” Accessed Jan. 15, 2020.

5 Erik J. Martin. Dallas Morning News. Dec. 28, 2019. “Adding
an auxiliary dwelling unit on your property may be worth it.” Accessed Jan. 15, 2020.

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strategies using a variety of insurance products to custom suit their needs and
objectives. This material is intended to provide general information to help
you understand basic retirement income strategies and should not be construed
as financial advice.

The information contained in this material is believed to be reliable,
but accuracy and completeness cannot be guaranteed; it is not intended to be used
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