A recent study from the Pew Research Center reveals less than half (45%) of adults aged 18 to 34 considered themselves financially independent from their parents. A quick scan of the current economy helps explain why.
A shortage of affordable housing, especially for first-time buyers, has a chilling effect on young adults. Average student loan debt is measured in five digits. The labor market remains in a state of flux, and entry-level wages make independent living a challenge.
Nearly a third of young adults in the 18 to 34-year-old demographic currently live with at least one parent. The percentage is even higher for 18 to 24-year-olds — 57% still live at home. The “sink or swim at 18” mentality of earlier generations has largely been replaced by a new economic reality.
“Young adults are reaching some key milestones such as marriage and parenthood later in life, even as they exceed their parents’ generation in educational attainment, employment, and wages,” Pew researchers wrote in their analysis.
While a social stigma remains concerning adult children who “fail to launch” into independence, parents and their Gen Z children are finding ways to adapt to a new family dynamic. In many ways, the shared living arrangement has proven mutually beneficial.
Adult Children Earn Their Keep
It’s a common misconception. Adult children who still live at home actively take advantage of rent-free housing, free utilities, and minimal household responsibilities.
In reality, Pew researchers discovered that 72% of young adults contribute financially to the household in at least one way. 65% report helping with grocery or utility bills, while 46% assist with rent or mortgage expenses. 64% of stay-at-home adult children say the arrangement significantly benefited their personal financial health.
Parents Discover Benefits of Delayed Empty-Nesting
While parents from previous generations often looked forward to the day their last child left one family home to start a new one, late Gen X and millennial parents are more relaxed about emptying the nest. Many have a frame of reference regarding the economic challenges of young adulthood and the struggle to find a job in today’s market. These parents are often more empathetic to their adult children who face difficult times.
Forty-five percent of parents describe the living arrangements with their adult children as a positive step in the relationship, while an additional 29% said it was at least “somewhat positive.” Both parents and adult children need to make sacrifices to accommodate each other, but the overall family dynamic was still solid and functional.
The Parental Checkbook Is Still Out
Even if an adult child no longer lives under the family roof, many parents still feel the need to provide financial support whenever possible. Fifty-nine percent of parents in the Pew survey say they helped out an adult child in the previous year, while 44% of adult children acknowledge receiving such help.
Sixty-eight percent of those beneficiaries were 18 to 24 years old, which is unsurprising. However, 30% of adult children between 30 and 34 also received financial assistance from at least one parent.
The survey broke down these parental financial contributions even further. Twenty-eight percent of the money went to household expenses, while 25% helped pay for cellphone bills and streaming service subscriptions. Seventeen percent of this financial assistance was applied to rent, 15% was earmarked for medical expenses, and 11% went towards educational costs.
While only 15% of parents consider these financial contributions as negative, 27% view them as positive, and 55% felt the impact was nominal. Parents with lower or fixed incomes were likelier to report some negative effect on their finances, with 36% admitting the loans affected their financial health “at least some.”
Some Adult Children Change the Financial Polarity
Although the financial relationship between aging parents and their stay-at-home adult children is often portrayed as flowing in one direction, the new cohabitation model is slightly different. Thirty-three percent of adult children surveyed claim they helped their parents financially in the previous year, while 14% of parents acknowledge receiving such assistance. Thirty-eight percent of parents say their children contributed towards a special circumstance, while 31% say they received payment towards recurring expenses or both.
“Young adults with lower incomes (43%) are more likely than those with middle (28%) or upper incomes (19%) to say they helped their parents financially. Similarly, parents with lower incomes are the most likely to say they received financial help from their young adult children (29%), compared with 9% of those with middle incomes and 2% of parents with upper incomes,” according to the Pew report.
The positive news for aging parents and their young adult children is that the appeal of independent living is still a powerful motivation for younger generations. The nest may not empty out as planned, but the additional family time should still be mutually beneficial.