One of the biggest changes since the recession began in 2007 is that more millennial’s, defined as people between the ages of 18 and 31, are living at home with their parents than ever before. Right now a record 21.6 million are living with mom and dad, more than a third of all millennial’s in the United States, according to a Pew Research Center study that was recently released.
That’s 36% of millennial’s, a rise of 4% since 2007 and, according to Pew, the highest percentage in 40 years.
One of the biggest factors for this increase is the decline in employment. In 2013, 63% of 18 to 31-year-olds had jobs but, in 2007, 70% were working.
“You’re much less likely to be living with your mom and/or dad if you have a job, and job-holding still hasn’t picked up,” said Richard Fry, a senior research associate with Pew Research Center.
The analysis also showed that there’s a gender difference when it comes to millennial’s living with mom and dad. 40% of men are living at home whereas only 32% of women are doing the same.
The study also reveals that, where once the bills that a child created stopped once they graduated from college, these days those same bills, and new ones, continue long into adulthood. In fact, it’s become a major financial planning issue for many parents according to the managing partner at Ballou Plum Wealth Advisors, Lynn Ballou, out of Lafayette, California.
The fact is, many parents are already sacrificing their own retirement plans, as well as their savings accounts, in order to send their children to college. The hope is that their daughter or son will find a good job and graduation and, possibly, be able to pay them some of that money back in the future.
“Come to find out, your grad is unemployable and can’t even find a job at Starbucks,” said Ballou, who estimates that one-third of her clients are providing some financial support to an adult child.
These unexpected expenses are forcing parents to make big cuts in their own spending as well as delay their retirement plans and, in many cases, dig into their savings accounts. Ballou says however that parents shouldn’t feel obligated to continue providing the same kind of support that they did when their child was a teenager.
Sheryl Garrett, a certified financial planner and founder of The Garrett Planning Network, says that “They could be there forever if you don’t charge them some rent and make them do some chores”. She added that any child unable to find work outside of their home should definitely be contributing to household duties and shores as much as possible.
One recommendation that many financial planners are giving to parents these days is that they beef up their emergency fund as much as possible, putting at least 12 months of cash aside for living expenses just in case.
“From where we’re sitting, it could be a good decade to work this out,” said Ballou. “Hope for the best and plan for the worst. Assume your child is not going to launch until they’re in their late 20s.”
Whether the job market picks up or not however, the fact is that the stigma among young adults about going back to live with mom and dad isn’t nearly as bad as it used to be. If and when the economy does make a full recovery, the tendency for many birds to return to their nest is still going to be strong.