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Retirement Planning > Saving for Retirement

‘Boomerang’ Children Don’t Derail Parents’ Retirement: New Study

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What You Need to Know

  • The share of U.S. adult children living with their parents has increased since the 1960s.
  • Data shows boomerang kids have a negligible empirical impact on their parents' finances.
  • Some parents, particularly fathers, expected to delay retirement, but they did not actually do so.

Boomerang children — those who leave their parents’ home as adults and then return — have been portrayed as a drain on their parents’ finances and a threat to their eventual retirement.

But there is little academic research to back this up, and a new study finds little evidence of long-term financial effects on parents of boomerang children.

These are the findings of Grant Seiter at the American Enterprise Institute, Mary Lopez at Occidental College and Sita Slavov at the Schar School of Policy and Government at George Mason University, as presented in a new working paper published by the National Bureau of Economic Research.

The trio uses data from the Health and Retirement Study to examine the effects of these “boomerang children” on their parents’ labor market expectations and choices, as well as on their wealth, health and life satisfaction.

While the researchers find that boomerang children are associated with a small increase in their parents’ subjective probability of working after age 65, they conclude there is no clear statistically significant evidence that boomerang children affect their parents’ current or future labor market choices; nor is there any evidence that they affect their parents’ retirement wealth, health or life satisfaction.

Why Boomerang Kids Move Home

In kicking off their analysis, the researchers cite prior academic work showing that the share of U.S. adult children living with their parents has increased since the 1960s. As of 2020, approximately one-third of children between ages 18 and 34 lived with their parents, with men and those between the ages of 18 and 24, respectively, being more likely to do so than women and those in the 25 to 34 age range.

As the researchers explain, some co-resident adult children never leave the parental nest, while the rest return home after living independently. This latter group are the “boomerang children” centered in the new analysis.

“Moving back home can be a rational choice for adult children who encounter shocks to their employment or income, allowing them to smooth consumption in the presence of borrowing constraints,” the report states. “The economic benefits may also outweigh any costs associated with social stigma.”

According to Seiter, Lopez and Slavov, a significant amount of prior research supports the hypothesis that financial shocks exacerbated by borrowing constraints increase the probability of an adult child returning home.

For example, one cited analysis finds that a lack of employment, low wages and high rental costs collectively increase the number of adult children who move back home. Another relevant factor, according to the analysis, is a greater amount of debt — particularly student loan debt.

“[These factors] increase the probability of moving home with parents and the duration of time spent back at home,” Seiter, Lopez and Slavov write. “[The literature] shows that having the option to return home reduces the cost of job loss, especially for adult children from lower-income households whose parents cannot provide pecuniary transfers.”

Prior research has also show that returning home allows adult children to hold out for jobs with high earnings potential, which often take longer to find or pay lower initial wages.

Do Boomerang Kids Harm Parents’ Finances?

While parents’ spending tends to decline and their savings levels tend to marginally increase once their children become adults and move out, it is not a given that the opposite will be true should a child later return home, according to the researchers.

“While there may be some uncertainty around the timing of a child’s departure from home, a child returning home is more likely to be an unanticipated event,” the analysis posits. “Additionally, parents may be more likely to view the boomerang arrangement as temporary, lasting only until the child can get back on their feet.”

In fact, the researchers suggest that the impact of a child returning home may depend on whether the event is transitory or long-term. Clearly, a long-term stay with parents extends the timeline of any effects, be they positive or negative.

In running their analysis, the researchers find no clear, statistically significant association between boomerang children and parental health, wealth, probability of working, hours worked or perceived well-being. However, they do find an increase in the self-reported probability of working full-time after age 65.

The increase is concentrated among men, those under the age of 62, and those in the top half of the initial wealth distribution.

“Overall, our results provide evidence that parents may delay their anticipated retirement when children return home,” Seiter, Lopez and Slavov write. “However, there is no evidence that they adjust their current labor market choices. Moreover, there is no evidence of an impact on their wealth, health or life satisfaction.”

Drawing Conclusions

As recalled in the analysis, when the COVID-19 pandemic began, many adult children moved back in with their parents, and some reports suggest that a large share of these boomerang children are still living at home.

“While the media and popular movies (like the 2006 romantic comedy Failure to Launch) sometimes portray adult children who live at home as exploiting their parents’ resources by overstaying their welcome, we find no clear evidence that boomerang children affect their parents’ financial status, labor market outcomes, health, or life satisfaction,” the authors conclude.

On the other hand, the report shows that there are real income and marital shocks that drive some children to return home and that the return is often transitory. Thus, adult children appear to rationally use returning to their parents’ home as a form of insurance, and the overall familial impact of the choice can be positive.

“While fathers may believe they have to work beyond age 65 because of a boomerang child, they exhibit no actual change in labor supply and only small decreases in life satisfaction and self-reported health,” the authors conclude. “Mothers do not experience any decline in well-being, health or wealth.”

As returning to the parental home continues to become more common, the authors suggest, this will likely reduce the stigma associated with this living arrangement. Ultimately, the researchers argue, these results can help inform both policymakers and parents about the impact that a boomerang child could have on their retirement and well-being.

(Image: Shutterstock) 


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