Millennials and their delayed entry into financial adulthood remain a subject of public fascination, scrutiny — and even scorn. Five years ago, a Pew study of U.S. Census data found that 16.3 million millennials were still living at home, even more than during the housing bust and subsequent recession. Immediately, newspapers printed blistering headlines calling on the 18- to 31-year-olds to get their act together: “Millennial Moochers” and “Dear Millennials: You’re Ruining the Economy. Move Out.”
Despite this onslaught of public censure, millennials are not taking the hint. A new Country Financial Security Index survey of 1,000 adults suggests, if anything, this trend has become even more entrenched. More than half of Americans age 21 to 37 have received financial assistance from a parent, guardian or family member since turning 21.
In fact, 37% of them receive money monthly from their parents. Almost six in 10 receive money a couple of times a year. Given this ongoing financial dependence, there is a growing gap between the age most Americans feel like an adult (18 years) and when they feel they should reach financial adulthood (25 years).
The immediate inclination might be to think of this in negative terms — a “failure to launch” or overprotective parents stunting their offspring’s growth by letting them back into the nest. However, as financial professionals know, the reality is more multi-faceted. millennials are living with their parents longer because they’re struggling with mountains of student loans. Americans owe more than $1.48 trillion in student loans — over 20 times more than the country’s total credit card debt. The average graduate from the class of 2017 left college with $39,400 in debt.
The rules of the financial game are different in many ways than they were 10, 20 or 30 years ago. Consequently, it’s time for financial professionals to reshape the notion that a millennial who receives financial help from their parents is lazy or entitled.
Rather than being a failure to launch, moving back with mom and dad could represent a responsible choice, as long as it’s coupled with a realistic assessment and a plan for the future. With these arrangements becoming more common, financial planning can play a key role in ensuring that this move is a positive situation that benefits both the parents and their offspring. A financial professional can meet separately and/or jointly with parents and the adult child, helping them sort through complicated decisions. Their role can help to: