Almost one in three adults under 35 remain at home, analysis of Australian Bureau of Statistics data indicates, a figure up from one in five in the 1970s.* If you do manage to shoo them out of the nest it’s not for long, almost half will return at least once before their 35th birthday. Remember when George Costanza shamefully moved back home with his parents, this trend is now the norm. 

Why the increase?

Higher living costs, house prices up to 12 times annual income and large HECS debts are keeping kids in the parental home longer. Also contributing are the trends for young people to participate more in higher education, marry and have children later. 

One of the most significant demographic shifts over recent decades is the demise of marriage and the rise of single people. Dating back to 1880, the most common living arrangement among young adults has been living with a romantic partner. In today’s world, people are getting married later in life, or not at all.

Effect on parents

While living at home offers great financial benefit to the adult child, what is its impact on their Baby Boomer parents? On top of the increased burden of home duties, there’s also an impact on parents’ accumulation of retirement wealth. 

In the past, parents would have been preparing for retirement at this age – perhaps using any extra income to boost their super. Even when children do make financial contributions, the parents can remain out of pocket.

The actual cost differs from family to family, but an AMP report revealed that in a middle-income family, an 18-24 year old living at home costs their parents an average of $678 per week – or more than $35,000 a year.^

These additional costs can have a big impact on retirement, with retirement plans delayed and savings significantly decreased.

Benefits of living at home

Rest assured there are also many benefits to having young adults spend their 20s living under Mum and Dad’s roof. Parents can be more assured about the safety of their children.  When your child does eventually leave home they are more financially secure, having been able to possibly save a deposit for a home, and that is one less worry for the parent.

Living with your adult child can also foster closer relationships and allow the parent to give ongoing guidance and advice on a regular basis. The adult child can also be an invaluable source of support for the parent both emotionally and physically. As such, the trend of adult children living with their parents can be seen as the beginning to rebuilding that most important social institution—the family.

How to keep your retirement dreams intact

There’s no reason why you can’t help your kids by letting them stay at home into their 20s and even their 30s, and at the same time, prepare for your retirement.

It’s just a matter of having a plan in place that ensures you’re not being overstretched.  A good first step is to speak to a financial adviser so you can figure out how you can support your kids while still protecting your retirement nest egg.

If you need help planning out your retirement, TelstraSuper Financial Planning can sit down with you and develop a plan. Call TelstraSuper on 1300 033 166 Monday – Friday between 8.30am and 5.30pm (Melbourne time) or you can request a call back online.

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