When adult children return to the nest

It's hard to say no to an adult child who wants to return to the nest while job hunting after college or after a layoff, but parents need to set some financial ground rules early—or they could end up broke.

Many generous parents find themselves coping with a situation where their offspring never pays the bills, pressures them for help with big-ticket expenses—whether it's a car or grad school—or shows no signs of wanting to move out.

Beyond creating dependency and entitlement in children, this state of affairs can derail parents' ability to enjoy a secure retirement, said Chris Hobart, CEO of Hobart Financial Group, a registered investment advisor.

In a worst-case scenario, the parents may create a financial calamity for themselves, experts say.

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"The biggest problem is they end up financially compromising themselves," said Leslie Tayne, an attorney who specializes in debt and bankruptcy. Tayne often works with parents of grown children who've gotten into financial trouble because of their own generosity.

"I have seen people incur a severe amount of debt, bordering on bankruptcy, as a result," she said.

As a brutal job market makes it hard for young people to get a toehold, and even pushes some middle-aged professionals on to the unemployment line, many have few options except returning to their childhood bedrooms while they are looking for work.

A Pew Research Center report published in August found that the percentage of adults ages 18 to 31 who live in their parents' home increased to 36 percent in 2012, up from 32 percent in 2007—the greatest share in at least four decades.

Often, it's a last resort. Adam Diab, 29, moved back in with his mother and two other young-adult siblings in West Boca Raton, Fla., in 2009. His $750-a-week job as an assistant graphics manager at an advertising call center had dried up and he'd drained his savings while job hunting

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"It was easier, in the sense that I didn't have to worry about where my next meal was coming from," he said.

Diab lived with his mother while working in a part-time, $10-per-hour gig he found at a tobacco shop. But he got a better-paying job as an operations manager at a local business last fall and moved out, into a rented room at a friend's house, this past July.

"You can only be expected to support your kids for so long," he said.

As Diab's experience shows, having a child back at home can turn out just as it should: family stepping in to help family during a temporary downturn. But the pitfalls of this particular situation are myriad.

The following are some of those hazards—and ideas for ways to avoid them, according to financial experts.

Your child stays … too long: On average, parents believe children should leave the nest within five years of graduating college, according to an August survey by Coldwell Banker Real Estate.

Leaving the situation open-ended can result in it lasting a lot longer than that. Parents should also ask what an adult child will be doing while living back at home and whether they will be earning money. Will they stay until they get a job—or until they have money to buy or rent a place of their own?

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At a certain point, parents who are feeling the financial strain may need to bring up a timeline for the child to move out, experts say. That's a hard thing to do, so in some families, it may have to fall to the parent best equipped to handle it.

"In my experience, dads tend to be more likely to say, 'Hey, it's time to cut it off,' " Hobart said. "It's usually the moms who [want] to take care of the kids."

Your child contributes nothing financially to the home: Parents should be candid about what their household expenses are and negotiate a specific amount children will contribute, based on their current circumstances, said Tayne. "It is important that the adult child is held accountable as a responsible and productive member of the household," she added.

Diab, for instance, contributed about $60 a week to the family budget and was responsible for his own transportation costs.

Your child expects you to pay for extras: Even if you and your child successfully negotiate a shared living budget, your son or daughter may still expect you to provide other support. If you live in a suburban area with little public transportation, it may be hard for an adult child to get around or travel to a job.

Will the child be able to pay for a car, gas and car insurance—or is he or she expecting you to foot the bill, or worse, serve as a taxi?

"The biggest issue I've heard from a lot of parents is that the kids are not that far removed from living at home," Hobart said. "They kind of fall back into old habits and expect mom and dad to take care of expenses."

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Your child needs help with education expenses: If your child can't find a job immediately and wants to get additional education or a graduate degree, it's important to discuss who will take out and/or pay the loans.

Tayne has worked with upper-middle-class parents who are struggling because they see others in their communities providing this kind of support to their children and want to keep up. "They're supporting kids in apartments in the city or expensive schools they shouldn't be going to," she said.

Cosigning a student loan can affect parents' finances if their child can't make the payments, noted Stanley Molotsky, president and CEO of the SHM Financial Group, a financial planning firm. "If parents have cosigned on a loan, they are totally financially responsibility for that," he said.

You don't have any backbone: While it can be painful to push children toward financial independence, it's ultimately good for them, experts say.

Supporting them at a standard of living that it took you decades to be able to afford can prevent them from learning to live within their own means, according to Hobart.

"The kids have come to expect a certain lifestyle," he said. "Once they get out on their own, their immediate goal is: How do I replicate that lifestyle? They go into debt."

Diab, who acknowledged that he'd had some growing up to do the past few years, said his mother never pushed him to move out.

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Instead, she "inspired" him by reminding him of how happy he'd been when he'd had his last job and could afford, for example, to buy his siblings mobile phones as holiday gifts.

"She always had my back and supported me but definitely let me know that, more than anything, she wanted me to establish my own life and not just sit in a dark room playing video games all the time," Diab said.

—By Elaine Pofeldt, Special to CNBC.com.