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Helping boomerang kids: Be aware of your financial risks

Have your adult children moved back home? Here's how to help them without jeopardizing your own financial security.

Six months ago, Marie and Jim Fostino's peaceful empty nest in Goodyear, Ariz., became a raucous household. One daughter moved in with her two children in tow; then another daughter came back home. "I think my husband preferred it when it was quiet," says Marie, a 56-year-old paramedic, "but I say these are signs of life: the toys on the floor, the noisy kids."

Provide (some) assistance

A 2009 study by the Pew Research Center revealed that 13 percent of parents with grown children had an adult son or daughter who had moved back home within the past year. While it's natural to want to help your children, it's also important to prioritize saving for your retirement and to maintain order in your home. Here's how to aim your boomerang kids toward independence:

  • Focus on your own finances first. You might be tempted to divert retirement dollars toward financial assistance for your adult child, but your primary financial goal should remain preparing for retirement. Otherwise, in a few years, your children may have to return the favor and host you.
  • Don't give up your financial cushion. Make sure to keep savings intact for yourself. Any money you withdraw from retirement accounts to support your adult children misses the opportunity to grow and compound — and fund your post-career years.
  • Set some ground rules. You're being a gracious host, so it's reasonable to expect your children to be good guests. They should contribute to household expenses as well as chores such as cooking, cleaning, shopping and home repairs. The Fostinos charge their daughters a total of $700 a month in rent, and leave notes reminding them to do chores. You're also within your rights to bar visitors you don't want in your house.
  • Help them build their careers. Many adult children return home because they can't find work. You might choose to help them financially by paying for career counseling or specialized training to boost their job prospects.
  • Plan an exit strategy. When a child moves back in, set specific timeframes for finding a job, building savings and moving out. Regardless of your child's financial circumstances, it's important for all parties to understand that the arrangement is temporary.

For most families, the boomerang arrangement is short-term. Until the day your children move out again, keep the relationship friction-free by remaining true to your own interests as you support your family.

Fast Fact: A 2010 survey by the research and consulting firm Twentysomething Inc. says the percentage of college graduates planning to move back home after graduating has risen to 85 percent.

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