'Boomerang' Children Don't Derail Parents' Retirement: New Study

'Boomerang' Children Don't Derail Parents' Retirement: New Study

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.”

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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.

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