With little retirement savings, many Baby Boomers move in with grown kids

PHOENIX (AZFamily) — Make room for mom and dad. Baby Boomers haven’t saved enough for retirement, and now a growing number of older adults are moving in with their grown children to make ends meet.

“The average median retirement income for Baby Boomers today is $202,000,” said Shane Stevenson from Winston & Companies Retirement and Financial Services. “When you think about that and the average retirement spending of about $51,000 a year, that $200,000 nest egg is not going to go far at all.”

With the mismatch in retirement income and living expenses, something has to give.

“We’re seeing a lot of people actually start to think about moving in together with other relatives,” Stevenson said, noting the cost of child care, elder care and housing are the driving factors pushing people to multigenerational living.

Multigenerational living can be financially beneficial to all parties. In many cases, Baby Boomer grandparents are helping with child care, significantly easing the burden of skyrocketing daycare and babysitting costs.

According to Pew Research Center, the number of people living in multigenerational homes quadrupled from 1971 to 2021 to nearly 60 million. Most are adult children living in their parents’ homes, commonly referred to as the boomerang effect. Pew has also documented an uptick in the “reverse boomerang effect,” where grown children are the head of the household, shared with a parent.

“It’s a pretty big change, and aside from just the relationship change that’s going to take place, you’ve got to make sure that you’re not going to pinch yourself or set yourself up for a sticky situation down the road,” Stevenson said. “Start to build a budget. Maybe even get some contracts written up to say, ‘Here’s how we’re going to share expenses. Here’s who is responsible for X, Y, and Z.’”

For retirees and soon-to-be retirees, it’s also important to keep saving.

“You want to start looking at all of your assets and make sure they’re all positioned in the most effective way possible for you, especially if you’re still working,” Stevenson said. “Make sure you’re getting your match in your 401K if you can. Get that free money, but anything over the match, we’d recommend putting somewhere else and letting that really start to grow in those last couple years until retirement to try to boost up your retirement nest egg.”

For the younger generations, time is your friend.

“It’s absolutely critical that you start saving as soon as possible,” Stevenson said.

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