Mom? Dad? I'M Home! - increasing numbers of college graduates returning to live with parents - Brief Article

Kiplinger's Personal Finance Magazine,  August, 2001  by Melynda Dovel Wilcox

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TRENDS | Struggling to land on their feet, RECENT GRADUATES are beating a path to their parents' door--and getting a warm welcome.

OVER THE PAST ten years, the economy has boomed--and so has the number of boomerang kids. Close to 18 million 18- to 34-year-olds live with their parents, up from some 12.5 million in 1970. More than half of the current college students who responded to a June online poll at MonsterTrak.com said they plan to live with mom and dad after graduation, and about 20% of them plan to stick around for more than a year.

The job picture for young adults isn't nearly as bleak as it was in the early `90s, when Generation X liberal-arts grads entering the labor force in the middle of a recession ended up living at home by default. People in their twenties have suffered disproportionately from recent dot-com layoffs, but they're back home by choice, and parents seem more comfortable with the arrangement.

"If your parents live in San Francisco and you want to work there, it makes sense to live at home," says David Morrison, president of Twentysomething Inc., a research firm in Radnor, Pa. That's especially true because young high-tech workers have been priced out of the real estate market in places such as Boston, New York City, Silicon Valley, and Austin, Tex.

Today's parents aren't as embarrassed as they were a decade ago to admit that their kids are back, perhaps because they or their friends have already gone through the transition with an older sibling and are confident that eventually the kids will make it on their own.

Young adults themselves are more inclined to view coming home as a steppingstone to greater financial independence--a chance to pay off debt, save for a down payment on a, house or squirrel away capital to start a business. With the shift in the economy, "twentysomethings have moved away from a spend-spend-spend attitude and are becoming more money-conscious," says Amanda Freeman, director of research and trends for Youth Intelligence, in New York City.

They're also less adamant about breaking loose from their parents than they used to be. "Young people today are much more approving of their parents," says Neil Howe, an economist and author of several books on generational issues, "and the parents are more comfortable with the culture of their children."

Still, parents will be most successful in dealing with their boomerang kids if they work out a cost-sharing arrangement--and set a timetable for their departure. "Parents might say, `If you want to start a company, we'll give you a couple of months to get it going, but we'll take an equity stake in it,'" suggests Morrison. Rather than charging rent your kids might not be able to afford, you could ask them to cover their share of food and utilities.

Securing health insurance is another top priority. Adding a young adult to a parent's policy usually isn't an option unless he or she is a full-time student under age 23. Your best bet is a short-term policy from an insurer such as Fortis or Golden Rule. A 22-year-old male living in California, for instance, would pay $130 for a three-month policy from Fortis with a $1,000 deductible.

COPYRIGHT 2001 The Kiplinger Washington Editors, Inc.
COPYRIGHT 2001 Gale Group