Calculate the Cost of Supporting an Adult Child
Thanks to the post-crisis economy and lagging labor market, millennials have inherited the reputation of the “boomerang generation.” We all move home with our parents and struggle to make ends meet because we’re too busy buying avocado toast, right? This is a broad and unfair generalization. However, boomerangs do happen , and if you are the parent of an adult child (or ever will be), you may wonder how much it will cost you.
A recent study by NerdWallet examined the cost of caring for an adult child in terms of retirement savings. In particular, they found:
- On average, parents say the longest period of time their adult children have lived with them is 4.5 years. Almost 3 out of 5 parents with children 18 years of age and older have adult children living with them for more than a year; more than 1 in 5 adult children have lived with them for more than five years.
- College-paying parents can miss out on nearly $ 80,000 in retirement savings. More than a quarter of parents of adult children are paying or have already paid for their children’s education or student loans.
- Almost a quarter of parents saving for retirement expect their children to provide financial support after retirement. Millennial parents are almost twice as likely to talk about it (44% versus 25% of Gen X parents and 5% of baby boomer parents).
They also built a calculator to help quantify the cost. You enter details of how much more you can spend on groceries, health insurance, or other expenses, and the calculator will tell you how much it will cost in terms of investing in retirement. You can check it out here.