“Boomerang” children who move back home may not be impacting their parent’s retirement as severely as initially thought.
A new paper from the National Bureau of Economic Research (NBER) finds that despite being associated with impacting their parents short- and long-term financial futures, there is no evidence that suggests children who return home impact their parent’s “labor market” choices, nor do they influence their wealth, health, or life satisfaction.
The report states that while boomerang children have been portrayed in the media as a monetary burden that affects retirement for parents, there is no academic research that proves that suggestion. “No prior academic research has examined the extent to which adult children returning home compromises the retirement plans or wellbeing of parents,” the report writes.
Instead, current academic research shows little change when a child moves in or out of a parents’ home. NBER cites research from the Boston Center of Retirement Research that shows parental net worth remains unchanged either way.
Long-term stays coincide with parental financial distress
While adult children who move back home may not concern their parents at first, NBER points to research that relates the length of time with an increase in financial stress. Research from the Labour Economics journal concludes that boomerang children who stay at home on a long-term basis could disproportionately impact their parents’ finances.
Another piece of research from the Health and Retirement study, a biennial national survey of individuals over the age of 50, shows parents with boomerang children are likelier to work full time after age 65. This is even more true for fathers compared to mothers, findings show. As a result, this may delay retirement for parents.
However, the research ultimately finds little to no long-term impact on wealth, labor market choices, satisfaction, or health conditions.
Boomerang children may impact parental retirement outcomes
A transition period with boomerang children could have short- and long- effects on parental retirement outcomes, says NBER. Research shows that adult children with financial or relationship struggles can be a source of stress or conflict for parents, with parents providing support for their boomerang children. Once children leave home, parental transfers are shown to decline by $1,500 a year.
Additionally, findings from the Journal of Retirement show that parental savings in retirement accounts increases only slightly when children leave.
Yet, some households experience positive impacts from children moving back home. Employed adult children can contribute to expenses and groceries, thus reducing any negative effect on finances and retirement, the research says.
The paper concludes that while the media depicts boomerang children as a financial shock and burden to parents, multiple factors also play into any potential financial and/or retirement effects. Ultimately, there is little research to indicate the impacts are lasting.
SEE ALSO:
- More College Students Heading Back Home, Putting Retirement at Risk
- Parents Rank Saving for College Over Retirement
- Parents Sacrifice Retirement to Save for Kids’ College
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
