Parents with young adults living at home are facing a juggling act: How to simultaneously provide for their children while saving for retirement. As inflation continues to bite nationwide and Americans feel increasingly pessimistic about their finances, this new “sandwich generation” is trying to figure out how to balance two of life’s most vital fiscal responsibilities.  

Record Young Adults Back Home

With inflation, the possibility of a recession looming and high rents nationwide forcing more young adults to move back home, data from last year from the U.S. Census Bureau puts the problem into perspective. A majority, 58%, of people aged 18 to 24, are living with their parents, and among young adults aged 25 to 34, a record high of 17.8% lived at home in 2020, the highest figure in 60 years.

Over half, 52%, of Americans under the age of 29 were living at home with their parents during the pandemic, something that has not happened since the 1940s, Pew Research reveals.

While the worst of the pandemic may be behind us, the issue of housing affordability is not going away anytime soon, an issue that is negatively impacting both young adults and their parents alike.  

So, even though many young people are back in their childhood bedroom, parent’s basement or garage apartment, they still aren’t able to put away money for buying a home. In fact, the home ownership rate of Millennials significantly lags behind other generations; 63%, of Millennials who plan on purchasing a home don’t have the funds for a deposit.

CEO of Rent to Own Labs Martin Orefice says, “College education is expensive, and the debt that comes from that is a burden. Rent is high, making it hard to save for a down payment. Property values are incredibly high, and wages are fairly stagnant, especially when you control for inflation.”

Richard Fry, senior researcher for Pew, tells CBS MoneyWatch that for cash-strapped young adults, “Multigenerational living, in a way, is a safety valve. It’s a calm from the financial storm. If they were not in multigenerational families, their poverty rate would be substantially worse off.”

Fry adds: “Multigenerational living is particularly prevalent among what I would call ‘disadvantaged’ young adults, or less-educated adults. They would be in much more dire economic straights if they didn’t live with their parents or grandparents.”  

‘Boomerang Kids’ & Retirement

With a record share of young adults moving back in with their parents, this group, known as ‘Boomerang Kids’ is impeding their own parent’s retirement. It is a tricky balancing act, as parents attempt to juggle providing for their already stressed young adults, while planning for their own retirement.

Susan Somersille Johnson, chief marketing officer for Prudential, says, “Many parents will do whatever it takes to make sure their kids land on their feet and are ready to take on the world around them—and that includes financially supporting young adults ‘boomeranging’ back home. For many families, this can dramatically change retirement plans.”

In a Pew poll taken before the pandemic and the current housing crisis, 55% of adults said parents of young folks 18-29 do too much for their adult children. For parents particularly stressed about their boomerang kids moving back home, Prudential Financial Planner Delvin Joyce tells Newsmax Finance that there are several ways parents can master this tricky balancing act.

Retirement Must Be Priority No. 1

“Parents should first meet with a financial planner to make sure they are on track for their own goals and objectives and then determine how much they can reasonably allocate toward supporting an adult child without hindering their progress,” Joyce suggests. “They should also set clear expectations for how their adult children will contribute to household expenses. This can alleviate some of the strain and also create a level of financial accountability that will better prepare the adult child for when they actually move out.”

Furthermore, Joyce recommends that parents saving for both retirement and helping out their kids prioritize their retirement first. “It’s imperative that parents prioritize their own retirement over financial support for their adult children—but if there are limited resources, I recommend finding other areas to scale back like reducing their travel and entertainment budget rather than retirement. The reality is, if you sacrifice your retirement to support your adult child, your child will likely have to return the favor at some point in the future when you run out of money in retirement. It’s probably easier to make the hard decisions and sacrifices now rather than in the twilight of your retirement years.”

Finally, with high rent and a difficult real estate market, Joyce predicts rents and inflation will have to come down in meaningful ways before most young adults will move out of their parents’ homes.

“Rent rates will likely be a higher driver in reversing the Boomerang Kids trend than declining home prices,” Joyce says. “From my personal experience in my practice , the younger generations who are most likely to boomerang have very different expectations around home ownership than older generations and typically prefer renting over home ownership. Overall inflation is also a key driver, but young adults typically feel the biggest impact at the gas pump.”

It seems that young people living at home are more concerned about their ride than their rent, especially if it’s rent-free at mom and dad’s.