Survive your boomerang kids without depleting your retirement savings

  • An adult child coming home to live with you can sidetrack your financial plans.
  • If you find yourself in the situation, lay down the ground rules for your adult children as soon as you can.

You should be enjoying life. Your kids are out of college, you're in your top earning years and you can see the finish line of retirement ahead of you.

Suddenly, your adult child moves back home because they can't find work or want to save up for a down payment on a home. Life has gotten in the way of your financial plans.

You're not alone. Last year, 14.5 percent of millennials ages 28 through 32 lived with their parents or grandparents compared with 5.5 percent of those 33 through 55, according to an analysis of census data by real estate tracker Trulia. See chart below.

If you find yourself in the situation, lay down the ground rules for your adult children as soon as you can, preferably before they land on your doorstep.

"The earlier you do it, the easier it is going to be to avoid negative feelings," said Rosemary Lichtman, a psychologist and co-author of "Whose Couch Is It Anyway? Moving Your Millennial."

Lichtman and several financial advisors recommend you take these steps to make sure your adult child's stay doesn't derail your or their long-term goals:

Set boundaries

Leo Tolstoy started his novel "Anna Karenina" with the observation that "all happy families resemble one another; every unhappy family is unhappy in their own way."

There is no one-size-fits-all strategy for adult children living at home, Lichtman said. Having a family meeting where members can openly express their concerns and expectations will make for a smoother transition.

"Know what you can compromise on and what you can't," Lichtman said. "Respect needs to be given on both sides of the generation gap in order to design a framework for your family."

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Create a spending plan and timeline

You should come out of the family meeting or meetings with a spending plan, said Lili Vasileff, a certified financial planner and president of Divorce and Money Matters in Greenwich, Connecticut.

The plan should include how expenses are shared, what savings will be tapped to pay for additional expenses and how, if possible, those savings will be replenished.

"Build in contingencies for financial challenges and milestones for marking achievements or failures," Vasileff said. "Have an end game in mind that is fairly certain."

Make sure adult children have skin in the game

Financial advisors are adamant that adult children living with you shouldn't have a rent-free ride.

"It's not about the dollar amount, rather the discipline of having to pay bills," said Brett Anderson, a CFP and president of St. Croix Advisors in Hudson, Wisconsin.

Anderson recommends parents put their children's rent money in a separate high-yield savings account. "When they do move out, you can help them even more," he said.

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