Independence is not just about the freedom to do whatever you want, whenever you want. It’s about developing the maturity to do the right things at the right times voluntarily. Like knowingly accepting the challenges of adulthood and moving out of your parent’s home in your teens or early 20s. This is supposedly the American way – but it has probably been a cultural illusion for the past 10 years or more. More middle-aged and elderly parents are living with their financially dependent adult children than ever before.
It’s a crisis liable to worsen in the coming years and decades when considering the world’s current coronavirus-fueled economic crisis.
Currently, over 52% of young adults aged between 18- and 29-years old are living with their parents.
There are more adult children living at home with their parents now than during the Great Depression.
Before February 2020, the percentage of American adult children living with their parents was 47%.
That is still a high percentage, but the situation worsened in the aftermath of the pandemic.
According to the Pew Research Center, 26.6 million adult children are currently living with their parents.
A large percentage of adult children living home are in their late teens and early 20s. After the initiation of pandemic-induced forced layoffs, many young, unskilled adults lost work.
Others took voluntary pay cuts to secure employment in newly anemic job market.
But it is folly to blame the rise of financially dependent adult children on the pandemic.
This was a progressively worsening issue before the pandemic struck.
Why is this happening?
Well, there are two reasons – one involves the pandemic and the other involves self-sabotaging parenting skills relative to money.
There are solutions to this problem. But they are hard to initiate (and should have been done long before).
Financially Dependent Adult Children – The Causes
The coronavirus pandemic has caused a globally reaching economic upheaval that few can cite precedent against.
Well over 30 million Americans are now on and/or being phased out of unemployment insurance benefits. Well over double that amount may have tried to apply but were unsuccessful.
Let that figure sink in. Since March 2020 and for a period of 26 consecutive weeks, about a million Americans applied for unemployment.
The CARES Act stimulus check that offered Americans a one-time $1,200 check was only helpful momentarily.
For tens of millions of Americans, unemployment benefits are ending with no 2nd stimulus check on the way.
Millions of Americans face imminent eviction as CARES Act enabled protections ended in August 2020.
Food banks across the country are being stretched to the breaking point, meaning food insecurity is a grim reality now.
So, its no shock that many young adults face homelessness and the prospect of moving back home.
However as explained before, this was a long before the pandemic struck.
The answer is much simpler.
Adult parents are the reason for their own financial suffering relative to financially dependent adult children.
Adult Parents Paying for Financially Dependent Adult Children on Purpose
Over 79% of adult parents are intentionally paying for the personal finances of their adult children.
That same percentage of adult parents were financially caring for their adult children even though they were imperiling their own retirement plans.
Adult parents spend on $500 billion on adult children aged 18- to 35-years old. Incredibly, $500 billion is over twice what most adult parent pay into their own retirement plans.
Surprisingly, about 3 out of 4 adult parents were intentionally putting their adult children’s financial needs before their own retirement futures.
This financially self-sabotaging practice is causing a so-called, “coming storm of broke elderly.”
From 1991 to 2016, there’s been a 204% increase in the rate of people 65-years old and older filing for bankruptcy.
Incredibly, this self-sabotaging financial behavior by adult parents is self-initiated.
About 54% of adult parents are paying for all or most of the bills for their grown, adult children. These include:
- Weddings
- Rent
- Tuition
- Cell phone bills
- Auto insurance bills
- Entertainment subscription services
- Credit card bills
- Health insurance premiums
While probably well-intentioned and initiated from a place of love, such practices create financially dangerous codependent familial relationships.
These behaviors create the indelible mindset impression to adult children that their adult parents are perpetual financial security nets.
Additionally, financially dependent adult children never learn financial independence in such situations. They have no reason to if 80% of adult parents willingly want to pay their bills.
So, its true that the pandemic has caused a surge in adults moving back home.
But this situation was occurring long before the pandemic struck. And it was primarily self-caused by adult parents themselves.
So, what is the solution?
A lot of tough love.
Financially Dependent Adult Children – Tough Love Solutions
Even though adult parents are primarily causing this situation, they also want help.
Once adult children feel emotionally entitled to having their bills taken care of, it’s hard to break the cycle.
In fact, 72% of adult parents wish they had a financial professional help them teach their adult children about responsible personal finance.
The best way to get financially dependent adult children out of the house is to take personal responsibility for the problem.
And to initiate tough love solutions.
Adult parents need to cut the financial support cord at some point. Not doing will only ensure further generations of financially dependent adult children living at home.
Enabling familial financial dependency early on makes it impossible to make adult children learn financial independence later.
Also, adult parents who don’t cut financial support for adult children risk experiencing their own, “coming storm of broke elderly.”
Adult parents should begin preparing adult children for a future cut-off date for financial support.
Explain to them that it isn’t a punishment, but a way of enabling long-deferred financial independence.
Adult children should be encouraged to focus on life goals, exploring the online gig-economy, and making realistic plans to move out.
The tough love part is the most important – a future date must be set for adult children to move out. And adult parents must insist their adult children leave by that date.
This is a lot easier said than done, since it is a process that should have occurred long ago. The assistance of financial experts should be sought when needed.
Adult children must learn to stop living at home and financially imperiling their adult parents’ retirement futures.
The best way to do that is to make them understand that self-sufficient financial independence is a goal and not a life option.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.