In the New York Times Magazine, there was recently an article about the boomerang generation. Kids are coming out of college and moving back home with their parents, perhaps after unsuccessfully trying to live on their own.
Regardless of whether this is a savvy way for kids to save money without sacrificing a certain lifestyle, or a sign that they are just not able to take care of themselves in this economy, the fact is that these boomerang kids aren't a temporary phenomenon. They appear to represent a new life stage. The article states:
"One in five people in their 20s and early 30s is currently living with his or her parents."
So, there is a 20% chance that adult kids might boomerang. And even if they aren't living at home, there is a great chance that these kids are still partially dependent on their parents for help with rent and other expenses. When the parents of this generation are still living together, they can have a conversation that asks, "What are we willing to do to support our adult children?" But when the parents are divorced, that conversation is a lot harder to have.
A real benefit of resolving a divorce outside of the court system, through collaborative law or mediation, is that these parents can have a facilitated discussion, during their negotiations, about what would happen if their adult child returned to live with one of the parents.
A judge in a litigated divorce will not want to hear anything about this possibility, because courts only require child support to be paid until the age of 21 in New York (and even younger ages in other states). If divorcing parents are relying on a court to tell them what the child support should be, the parent with whom the child moves home is going to be stuck supporting the child on his or her own. There will be no obligation for the other parent to help out financially, and the courts will not be able to change that fact.
Divorcing parents need to have a conversation about, and plan for, the boomerang generation. One option that clients have considered is to set money aside from their distribution of assets and hold those funds in a joint account in the event the child moves back home. If holding funds aside is not an option at the time of the divorce, the divorcing parents can make sure the agreement clearly states that if an adult child asks to move back home, the parents will use mediation, or work with a financial neutral professional, to figure out how to share the costs. The adult child can even be a part of the discussion. Some questions that need to be answered are:
- What will be the increased costs when the child is living at home?
- What will be the child's financial and non-financial responsibilities?
- How much extra is needed from the other parent and what can they afford to give?
With college loans rising, and companies being slow to make new hires, the boomerang generation is becoming a more permanent subset of the economy. What is now a 20% chance of adult children returning home may increase until the economy is - once again - able to support them. The boomerang generation is the new reality, and it makes sense for divorcing parents to at least consider this issue as part of their divorce negotiations.
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