4 Ways To Protect Retirement Savings When Your Grown Kids Move Back In

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Traditionally, when children turn 18, they move out of their parents’ house and either join the workforce or continue their education. Due to rising housing costs and fewer job opportunities, many adult children have been staying or returning home to live with their parents.

Moving back in with parents can be an excellent opportunity for an adult child to save up money or sort out their living situation. However, it can take a toll on parents, especially financially. Here are four things to do to keep your retirement protected while letting your child live at home.

Good Communication

The key to successfully living with others is good communication, but this is especially important when it comes to an adult child. If your child moves back in, it’s important to speak with them about their finances and future plans. Without this money talk, they may begin to coast and get comfortable living at home.

Coming up with goals and an expected timeline for how things will play out is an excellent way to measure progress. If your child is saving up for a house or trying to get a job, plan out short-term goals. For example, after three months, they should have $10,000 saved for a down payment or have sent out 50 job applications. These should align with long-term goals that would lead to your child having comfortable finances and being able to move out.

Set Expectations

Along with good communication, it’s vital to make sure you and your child are clear on the rules and expectations. Housing, utilities and groceries all cost money. If you’re unwilling to cover all expenses, there should be a clear outline of financial commitments to reduce any disagreements and monetary conflicts later.

Even if you’re going to pay for your child’s living expenses, your child should help out around the house. Chores such as lawn care, cooking, cleaning and shopping are all things that your child could help with. Make sure to discuss other house rules, such as curfews, quiet hours and guests, as well.

Teach Financial Habits

You didn’t wake up one day with good financial habits. You developed them over time. With that in mind, another way to protect your finances is to make sure your child has the tools to protect their own. If they can become successful and financially healthy, they will move out and cause less stress on you. 

One study found that less than half of children living at home have good budgeting skills. Teaching your child how to plan and keep a budget can help prepare them to be independent and live on their own. Other skills, such as teaching them how to build an emergency fund or manage credit and debt, can also help your child achieve financial freedom. 

Maintain Your Financial Health

Allowing your child to move back can help them get back on their feet or give them a head start. However, this shouldn’t come at the expense of your own financial health. Keep these things in mind to guarantee your own retirement and financial security.

Debt is easy to get into but difficult to get out of. If you have to take out a loan or use credit cards to support your adult child, it should be a last resort. Helping your adult child at the expense of your own financial health can put everyone at risk. Instead of taking on debt, be open with your child about the challenges and help them get an income.

It’s also important to continue to make contributions to your retirement accounts. Even if money is tight, making your regular contributions to your 401(k) and Roth IRA will pay off. Your money will grow and compound based on your investments, so you’ll have the financial security you need to live your desired lifestyle in retirement and cover healthcare costs.

Finally, if you’re having trouble charting your path forward with an adult child living at home, you may want to consult a financial advisor. Financial advisors cost money on their own. However, they can help you map out a path to navigating your financial difficulties, which will end up saving you more in the long run.

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