If Your Adult Child Moves Back Home, Your Retirement Plans Could Take A Hit

Adult children are moving back home and they could be draining their parents’ retirement savings.

A recent study from Thrivent shows that 46% of adults ages 18 to 35 have moved back in with their parents. Nearly two in five (38%) of boomerang parents who have had their children move back home say financially supporting their adult children has affected their retirement savings.

“When you’re supporting children, the typical analogy is to put your oxygen mask on first, and then help others. You need to make sure that any help you give will not derail your comfort and security,” said Justin Pritchard, a certified financial planner at Approach Financial.

Here are four tips for managing your finances when an adult child returns home.

Don’t Be Afraid To Set Boundaries

When your child moves home as adult, it’s normal to expect them to contribute to the household, whether that’s by paying a portion of the monthly utility bill, being responsible for grocery shopping, or taking on other household chores or bills.

You get to set the timeline for how long they can stay and let them know about your retirement savings goals.

“Communication is key. Don’t let resentment build. Maybe you can offer accommodation, but not additional financial help. Living rent-free is a significant benefit for a child,” Pritchard says.

Put Your Needs First

Decide how much, if any, financial support you can give to an adult child. Remember to keep your long-term planning (retirement) in mind when assessing this question.

“Make a plan to understand how much financial help you can afford to give. Most people want to avoid an outcome where you give too much and then you’re relying on your children later in life,” Pritchard said.

As you approach retirement age, you’ll have less time to bolster your savings—your children, on the other hand, will have many more working years ahead of them, and, therefore, more time to save for retirement.

“Take care of yourself first. Remember that it’s hard to borrow for retirement, and the older you get, the fewer options you have for earning money. Your kids have more runway and vitality, so they can adapt or borrow, if needed,” Pritchard said.

Catch Up on Retirement Savings

If you’ve had to help your children out financially, there are ways to catch up on your savings though.

At the very least, try contribute enough to your 401(k) to receive an employer’s matching contribution, but you’ll want to contribute much more than that if you can.

“To keep your finances strong, save as much as you can in your 401(k) and IRAs, if eligible. Remember that you can save even more once you reach age 50, which helps if you’re in catch-up mode,” Pritchard said.

For 2025, the following contribution limits apply to 401(k)s, according to the Internal Revenue Service:

• The annual amount you can contribute is $23,500.
• The catch-up contribution for people ages 50 and up is $7,500.
• An additional catch-up contribution for people ages 60–63 is $11,250.

For individual retirement accounts (IRAs), the annual amount you can contribute is $7,000. The catch-up contribution for people 50 and older is $1,000 in 2025.

And don’t forget about adding money to your taxable accounts, too, as these accounts have fewer restrictions than designated retirement accounts.

“That money is available for withdrawal whenever you need it. There are no age or employment requirements to access the money. You might owe taxes on gains, but flexibility is often nice,” Pritchard says.

Try Delaying Social Security

While you can claim Social Security as early as age 62, you can maximize your monthly Social Security benefits by waiting to collect until age 70.

“Social Security timing might be one of the most important decisions you make. The right age depends on a lot of details, but the longer you wait, the more you get each month,” Pritchard said. “More income means you’re less reliant on the markets and your portfolio. Social Security is government-guaranteed, inflation-adjusted, and tax-favored. You can’t get that combination anywhere else.”

Consider working longer to delay collecting Social Security. For every year after full retirement age (FRA) that you wait to collect, you’ll receive an 8% annual boost in benefits.If your FRA is age 67, your benefits would be worth 24% more if you waited three additional years to collect.

The Bottom Line

When an adult child moves back in, it’s important to establish boundaries so each of you knows what to expect out of the arrangement. Some parents may be fine with an adult child living rent-free as long as they help out with housework or other household duties.Others may require their child to pay rent or pay for household expenses, like grocery and utility bills.

Decide what will work for your family and have an upfront conversation with to avoid any misunderstandings. Ultimately, your long-term plans matter more and shouldn’t be neglected if you decide to help your children financially.