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.