8 Money Moves Retirees Must Make If Their Adult Children Move Back Home
Written by
Jordan Rosenfeld
Edited by
Levi Leidy
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The moment when your children become independent adults can be a big relief, financially (and in other ways) for many parents, freeing up money and time.
However, for a number of reasons, adult children sometimes move back home. Perhaps due to high inflation, more parents are supporting their adult children this year — a 2% increase, from 45% to 47% from 2023 and 2024, according to Savings.com. Moreover, well more than half (61%) of those adult children who’ve come back home are not contributing to any household expenses.
This can really throw a wrench into a person’s retirement plans — as Ellie (who preferred not to use her last name), a retiree in California, discovered when her 32-year-old son recently moved back home in 2021 after being diagnosed with epilepsy. She was only retired two years, and while she was happy to have him around, the only place he could stay was the granny unit she had been renting out for additional income to supplement her Social Security. She’d been renting it for $3,600 per month.
“I ended up renting the two extra bedrooms in my house to college students for $1,300 each month,” she shared. “It was still a $1,000 monthly overall loss.” She admitted this is not how she planned her retirement life, but there are some upsides. “He helps out around the house and makes me laugh a lot.”
If you’re in a situation like Ellie’s, here are eight ways to handle an adult child moving in so that it doesn’t threaten your retirement plans.
Set Clear Boundaries
One of the most important things to do when adult children move back home during your retirement is to set clear financial boundaries to protect your retirement savings, according to Tyler Meyer, CFP® and founder of RetireToAbundance.com. These will have to be up to you and your individual family unit, but it’s better to go in prepared than to find yourself in a difficult spot later on.
Have Open Conversations About Finances
Meyer suggested, “Start by having an open conversation about expectations, including contributions to household expenses and timelines for their stay.”
Additionally, he said that you should consider charging rent or asking for help with utilities and groceries to ensure you’re not shouldering the entire financial burden.
Revisit Your Retirement Budget
Meyer also recommended revisiting your retirement budget and making adjustments if needed. “Don’t hesitate to consult a financial advisor to help navigate this change. Your priority should be maintaining your financial independence while providing support,” he said.
Know Your Own Numbers
Before you let an adult child move back in, especially if they can’t pay for all their own expenses, you need a clear understanding of your retirement projections — including income, expenses, assets and liabilities, according to Patti Black, a CFP and CSA with Savant Wealth Management.
“If you can afford to do so, perhaps you have your adult child pay rent and then you save that money to give back to them when they move out for good,” she advised. “But, if you can’t afford to help financially, you need to make that clear upfront.”
Ask About Your Child’s Financial Goals
When an adult child moves back home, it’s a crucial time to talk about money. Don’t leave things up to chance.
“Share your financial goals and the values that impact how you spend, give and save,” Black said. “Ask your children what their financial goals and values are. Listen. Be curious. Bite your tongue if you must! Your goal is to model healthy financial behavior to your adult children, and they learn more from what they see us do rather than what they hear us say.”
Require an Investment
Ellie suggested that you “require an investment from them to offset the costs and not create financial or emotional dependency.” She said it’s easy to fall back into old patterns of “pre-adult parenting,” which can be dangerous to your and their financial and psychological autonomy.
Get a Written Contract
Ellie also recommended getting a written contract. “I’ve heard horror stories from parents whose adult children are ‘squatting’ in their home, causing extreme financial pain,” she said. “I’m fortunate in that my son wants to work toward independence, increase what he can contribute and save to replace the car he lost when he totaled it during the seizure that started it all.”
Aim For Short Term
Ellie insisted, “Let your adult children know that although you are more than willing to be a safe space for them, the goal is to make it a short-term solution.”
The emotions involved can make these situations especially sticky. “It’s difficult not to feel guilty when my son sends me rent money. I wish I could afford to let him live here free of charge, but I would end up losing my home,” she said.
These situations may not be ideal, but with clear communication and firm boundaries, you might just be able to help your adult child get back on their feet without risking your retirement.
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