Report: Letting Your Adult Children Live With You May Not Be Smart Financially

Daniel Doherty | March 12, 2015 3:30 PM

NBC News explains why:

Having your adult children living in your basement is worse than you think. Boomerang kids can actually hurt your chances of a sound retirement.

Those 65 years or older with financially independent children are more than twice as likely to be retired than people of the same age group who financially support their adult children, according to a new report that retirement market research firm Hearts & Wallets shared with CNBC.com.

That's because those who are still supporting their kids are often putting off retirement to do so, said Hearts & Wallets co-founder Chris Brown.

And it's a big group. The firm estimates that more than one-third of baby boomers are providing financial support to their children, family members or others. That's approximately 15.8 million boomer households, controlling nearly $8 trillion in investable assets.

That’s simply astounding. But what, exactly, constitutes “financial support”? Does this include Baby Boomers who are paying their kids’ bills -- or allowing them to live with them free of charge? Or both? Either way, I suppose the principle is the same: Baby Boomers are caring for their children financially in ways their parents never could have dreamed of.

Why? Perhaps one reason behind this phenomenon is the 2008 financial crisis. Unfortunately, I along with many of my fellow millennials finished up school at a time when the economy was unstable and jobs were scarce. A study last year reported by USA Today drives this point home: “One-quarter of millennials with a bachelor’s degree said they moved home at some point in their lives for financial reasons.” With no job prospects -- and little money -- what choice did they have?

The change also seems cultural in some ways. In the 1950s and 1960s, living with one’s parents after college was stigmatized, frowned upon, and atypical. Presumably this was motivation enough to leave the house. And yet individuals were also more inclined to get married younger. Hence they would not -- or perhaps could not -- live with their parents because they had a family of their own to take care of.