Can you afford for your adult kids to live at home?
Parents with adult children still living at home have the best of intentions to help their kids get ahead, but they might be putting their own financial futures at risk.
At the time of the 2016 census, almost 400,000 non-dependent children aged 25 to 34 were living at home (1), an increase of 20 percent from five years earlier. (2)
Why the increase?
Record high levels of house prices and rents3 and a challenging job market4 are two factors keeping kids in the parental home longer. Also contributing are the trends for young people to participate more in higher education, marry and have children later. (5)
Kids paying their way
Gold Coast solicitor, Ashley Bennett and his retail merchandiser wife, Julie have two daughters, Hayley, 24 and Lauren, 22. Both daughters have paid around $100 per week board since they left school and started in their first jobs. In the past, when Hayley’s boyfriend lived in the Bennett home, he paid board as well.
Though $100 is more than some of their friends pay for rent and board, the money doesn’t come close to covering expenses.
Dave Taylor has noticed the impact on his water, gas and electricity bills with his son Joel back in the home: “Even the shopping – it’s incremental, it’s so many little things that you don’t really notice creeping up on you, but then when you sit back and look at the accumulation of cost, you do go ‘wow’.”
The burden for parents
Though they get along well as a family, Julie Dowling says her girls have never really pulled their weight around the house. Often Julie says it’s easier to “not sweat the small stuff” and do household chores herself instead of nagging.
On top of the increased burden of home duties, there can also be an impact on parents’ accumulation of retirement wealth. (6)
“You’re subsidising them, there’s no two ways about it,” Ashley Bennett says. “I don’t think about it much, but I have no doubt it will affect the money we have to retire on.”
Nibbling away at your retirement
While Dave Taylor loves having his son at home, he’s occasionally tempted to ask Joel for the rent he’d actually be paying for the kind of property they live in. “And then that money could go towards superannuation or paying the mortgage off sooner,” Dave says.
“But then this other bit kicks in which is the paternal instinct and you go, he’s my kid and I want the best for him,” says Dave.
How to keep your retirement dreams intact
There’s no reason why parents can’t help their kids by letting them stay at home into their 20s and even their 30s, and at the same time, prepare for their retirement.
It’s just a matter of having a plan in place that ensures you’re not overstretching yourself. A good first step is to speak to us so we can together figure out how you can support your kids while still protecting your retirement nest egg.
- Australian Bureau of Statistics, 2016 Census Community Profiles. A ‘non-dependent child’ refers to a natural, adopted, step or foster child of a couple or lone parent usually resident in the household, who is aged 15 years and over and is not a full-time student aged 15-24 years, and who has no identified partner or child of his/her own usually resident in the household.
- Australian Bureau of Statistics, 2011Census Community Profiles.
- Parliamentary Briefing, Housing Affordability.
- Parliamentary Briefing,Employment – Measuring and improving outcomes for young Australians.
- Australian Bureau of Statistics, Australian Social Trends, Young adults: then and now – April 2013.
- Australian Bureau of Statistics, Home and Away: The Living Arrangements of Young People – June 2009.