Moving Back In - Many adult children are living at home, prompting some parents to ask, 'Why?' Here's a look at the trend and tips from members experiencing it firsthand.

by Gretchen Roberts | Illustration by Eric Sturdevant

These days, you can’t bet on an empty nest, even if your kids are grown. Twenty-eight percent of 18- to 34-year-olds live with their parents, according to the most recent U.S. Census Bureau reports.

That number is even higher in some European countries, particularly in Greece, Italy and Spain, places with a culture of family closeness, according to a 2002 study written by Harvard University researchers.

But why are adult children moving home? In the U.S., a combination of economic issues has spurred this trend. The Harvard study shows a direct link between high rent prices and adult children moving back home.

Debt from education, by some reports averaging $21,000 per student, also has played a role, especially when jobs are hard to find and starting salaries are less than ideal. The nonprofit Economic Policy Institute reported in 2006 that the labor market for young college graduates is still fairly weak, with average hourly wages below those in 2001.

Toss in the fact that parents and kids are closer than ever (see “The Relationship Factor” below), and it’s no wonder young adults are turning to Mom and Dad for help. Read on to meet families with kids back at home and hear their advice for others.

Providing a Jump Start

Katherine Richter, a 24-year-old Thrivent Financial for Lutherans member in Tuscaloosa, Alabama, experienced the student loan crunch firsthand. After earning a master’s degree in England, she returned to Tuscaloosa, found a job in her field, rented an apartment with friends and got engaged. Six weeks into her job, when her student loans came due, she stopped and did the math: All things equal, she wouldn’t be able to cover her bills.

So, Katherine visited her parents, Thrivent Financial members Tony and Sharon Richter, and brought up the idea of moving back in with them and her sister, Meredith, who’s living at home while in college. “My parents were really supportive,” Katherine says. “Mom thought it would be great so we could spend time planning the wedding, and Dad wondered why I’d ever moved out in the first place.”

Abby Uhrich, 23, was motivated to move home after seeing many of her college friends struggle to make ends meet after graduation. She also wanted to save for a down payment on a home. After receiving her diploma in Boston and a job offer in Minneapolis, she moved in with her parents, Jim and Marie Uhrich, Thrivent Financial members in Bloomington, Minnesota, and her brother, Alex, who graduated from high school this year.

“Abby didn’t know many kids who weren’t living with their parents to get started,” says Marie, a Thrivent Financial corporate employee. “It was a great point of discussion between Jim and me, because we both left home at the age of 18. Moving back home was a foreign concept to us.” Still, the Uhrichs were happy for the opportunity. “We both wanted to help Abby get off to a good start,” says Marie.

Setting Ground Rules

Bringing adult children back into the fold can have its pitfalls for parents and children, says Gwenn Branstad, a Thrivent Financial representative in Bloomington, Minnesota. “I’ve seen two problems with subsidizing adult children—one, when parents help their children so much that they put their own retirement and financial well-being at risk, and two, when they don’t allow their children to establish their own self-reliance and good financial habits.”

It’s important for parents to outline their own financial strategy so they can balance their retirement goals with the present needs of their children. Otherwise, parents may not save enough for themselves. Jeff Sturm, a St. Louis-area Thrivent Financial representative, says, “I’ve seen that it can curtail how much they put into their 401(k) or even whether they can make any IRA payments at all in a year.”

To avoid this and other pitfalls, families with grown children living at home also may want to:

Use a document of understanding. The Uhrichs sat down and negotiated a family contract that clearly outlines parent and child responsibilities. For example, Abby promised to get herself up every morning, help out occa-sionally and pay her parents rent, which they will return to her as a bulk sum when she moves out. Jim and Marie’s commitments included paying utilities, providing advice when asked and trying not to worry.

Encourage financial responsibility. Branstad recommends charging rent, not to change the relationship but to establish good habits. “Rent gets kids into the overall mindset of budgeting,” she says. “Whether you, as a parent, choose to use it to offset your own costs or bank it for your child, you send the message that lodging costs money, wherever it is.”

Sturm and his wife, Laurie, also a Thrivent Financial representative, took a different tack with their son, Derek, 25, who has been living at home awaiting a call from the U.S. Army. They, too, sat down to negotiate, but rather than charging rent, the Sturms decided which expenses were Derek’s responsibility.

Talk about wants vs. needs. “If you’re subsidizing a child and he’s running around with an iPod and going out to dinner while you scrimp, you have to question what you’re doing,” Branstad says. If your adult child is living beyond his or her means, sit down together and outline new money expectations. This will help reduce conflict.

Set a time limit. Katherine Richter already had her wedding date set when she moved home, so her family knew their time together was finite. The Uhrichs set a reevaluation date of about a year for Abby’s stay. With that date in mind, Abby has been getting organized by saving money, running some numbers and checking out the condo market. “I’m doing the preparation now, so when the time comes to move out, I’ll be ready,” she says.

The Blessings of Home

Jeff Sturm has relished his extra time with Derek, who will head to basic training any day now. “He’s got a great sense of humor, and I’m going to miss that,” Jeff says. “Plus, he’s good at fixing things, and it’s been nice to have an extra hand around the house.”

Marie Uhrich also loves having Abby home. “We’re a close family, and I really missed her when she was in college,” Marie says. “She’s a great friend and companion.”

The Richters say it, too. “We’re realizing that the good old days with just the four of us are coming to a screeching halt,” Sharon says. “We want to make the most of them.”

So, take it from these parents: If you lay out expectations and help your child make smart financial decisions (and do so yourself), you can enjoy having your beloved child home once more, before he or she flies away for good.

Gretchen Roberts is a lifestyle writer in Knoxville, Tennessee, and a regular contributor to Thrivent magazine.