How Gen Z & Young Millennials Are Redefining Life Stages, Markets & Retirement For Everyone

“So, what’s it like?” I ask. Looking away 26-year old Noah remarks, “It’s not the best. But hey, I get good food, my laundry gets done, so it isn’t terrible either.” Noah, and millions like him, are living with their parents long into what previous generations would have dubbed ‘adulthood.’ And, while living with mom and dad well past legal drinking age may not be “terrible,” staying home impacts the lives of both young adults and their parents.

A new record of young adults staying home with mom and dad was hit this year. According to Pew Research, the majority of young people, ages 18 to 29-years old, 52%, are living at home with their parents – surpassing the one time record high of 48% set during the Great Depression.

Young adults delaying their departure from the parental home is not just an American phenomenon. In fact, there is an entire field of study dedicated to this new life stage – emerging adulthood. According to Statistics Canada 42% of 20 to 29-year olds are living with their parents. Eurostat reports that most European countries on average have far higher proportions of young adults (ages 18-34) living at home than North America. Nearing the top of the list is Italy -reporting that 66% of young Italians are living with mom and dad. 

Many reasons are given for the record number of young adults living at home. COVID-19, pandemic-induced unemployment, inability to pay rent, college student debt are all single, and intertwined, explanations. Any one, or all of those reasons may contribute, but do not entirely explain the trend.

Long before COVID, and mounting student debt, the staying home trend has been increasing for six decades. The all time low of adult children living at home (29%) was 1960. Each decade thereafter it has steadily climbed. For example, about one-third (32% in 1980 and 36% in 1990) of younger Boomers and Gen X’ers coming of age in the 1980’s and early 1990’s lived with their parents. Whatever the reasons for staying home with mom and dad, there are rippling impacts across the generations.

The social life of young adults is likely to take a hit. Ashley, a 27-year old paralegal moved back in with her parents after graduating college nearly five years ago. “It’s a little weird,” she says. “Even though my parents are okay with me staying out as long as I want, you still feel like you need to ask them, or feel weird coming home at 3 a.m. or if you choose to not come home at all.”

Ashley is not alone in how she feels, but statistically, she, and most young people about her age, are alone. The General Social Survey reports that in 2019 a little more than half (51%) of young adults ages 18-34-years old did not have a romantic partner – a record high since 1985.

Living at home may crimp more than your love life — it may dramatically slow progress in finding a significant other, and everything else that follows. Living with mom and dad, by definition, delays forming a new household – and quite often having children.

The Harvard Joint Center for Housing Studies reports a steady decline since the great recession in household formation for people ages 25 to 34 years old. Likewise, as discussed in my previous article, birthrates are at a record low. In fact, women 35+ years old are the only cohort to show a modest increase in having children.

Households are engines of consumption and drive markets. New households, in part, drive economic growth. Fewer new households suggest less demand for almost everything – from services to the stuff that fills rooms, closets, and cabinets, and especially dampens the demand for the apartments, condos, or houses that are home to those empty spaces.

But, staying home is not just affecting young adults. Gen X and Boomer parents are impacted too.

On the financial front, about six in ten parents of young adults between ages 18 and 29-years old report in a 2019 Pew Research Center survey that they have received financial help from their parents. In a related study, Pew reports that 45% of young adults indicate they have received “a lot” or at least “some” financial support from mom and dad.

As a parent, I find the next stat predictable. Many parents believe supporting our kids, at any age, is part of our ‘job description.’ About two-thirds of parents believe they do just about the “right amount” for their children. From cell phone bills, transportation, student loans, healthcare expenses, to even leisure travel, many parents may find themselves chipping in, or totally on-the-hook, for their adult child’s recurring expenses – but, at what cost?

Most parents with children 18 to 29-years old are well into their 50s if not knocking on the door of retirement age. Even moderate additional, and unanticipated expenses, to support an adult child drain resources that might ensure a financially secure retirement – especially for the countless Gen X’ers and Boomers that are uncertain if they can retire at all.

Phil is a 62-year old carpenter with a 23-year old son and 25-year old daughter living at home. “I enjoy my work and would probably work longer anyway, but this job gets harder as you get older.” He goes on to say, “I don’t have a choice. My kids need my help. They went to school (college), they work, but don’t make much…so what am I going to do? Of course, I will work longer to help them out.”

There are also hidden costs that are difficult to quantify. Some near-retirees and others already retired had planned on downsizing or pursuing activities put on hold in their younger years. With adult kids at home, selling the family home to downsize, possibly freeing up needed cash equity in the process, becomes impossible.

But, it may be older women that pay an inordinate cost, not just financially, but in opportunities delayed or perhaps lost. MIT AgeLab’s CareHive Research Consortium has found that women, particularly the oldest adult daughter, play a critical role in caregiving across the generations. Many Gen X and younger Baby Boomer women are still providing care, and in many cases, financial support to elderly parents. Sandwiched between younger children and aging parents for years, often resulted in women shortchanging both their careers and retirement savings. Now, just when they thought they might have time for themselves, to work, to volunteer, to try something new, middle-aged and older mothers find that they remain the fulcrums of wellbeing for their adult children, their partner, and their elderly parents.

Noah may be correct, it may not be “terrible” to live with mom and dad in your 20s and beyond. Many parents are thrilled to have their children live with them for as long as possible — a reason why many young adults may be at home, rarely cited by social observers. But, whatever the reasons are for young adults’ delaying their departure from home, this evolving trend is not just about the changing definition of young adulthood, it is also about the changing definition of life stages across the life course, including retirement.

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