The “Boomerang Generation,” a subset of Millennials who have returned home following college graduation or the twenty-something set who have never left the nest, are negatively impacting the retirement plans of their baby boomer parents.
According to a study by Pew Research, three in ten young adults ages 25 to 34 (29 percent) are living at home with their parents. Between a sluggish job market and a down economy, a substantial percentage of Generation Y cannot afford to set out on their own. This predicament has resulted in adult children leaning on Mom and Dad for financial support, leaving parents to deal with unplanned dependents during the years they should be vigorously saving for retirement.
The economy is mostly to blame for the rise in this trend. Data shows that Americans living in multi-generational family households is at the highest level it has been since the 1950s, with the steepest increase occurring over the past five years.
Meanwhile, the unemployment rate of college graduates ages 21 to 25 is 10 percent (compared with 5 percent in 2007), and 16.8 percent are underemployed (compared to 9.6 percent in 2007) according to a 2014 report by the Economic Policy Institute.
In addition, young adults who are not employed are more likely than those who are working to be living with their parents or to have moved back home temporarily in recent years. Among 18- to 34-year-olds who are not employed, nearly half (48 percent) have lived with their parents. This compares with only 30 percent of those who are employed full time.
Few of these boomerang kids are financially contributing to the household as they are saddled with student loan debts. The White House recently released figures that show 71 percent of those earning a bachelor’s degree will graduate with debt, an average of $29,400. This cycle is not only leaving many graduates little choice but to rely on their parents as a lifeline, but causing Millennials to put other life plans on hold such as marriage, parenthood, or both.