Why Are Retirement Savings Eroding Due to Kids in Parents’ Pockets (KIPPERS)?

A colloquial expression for adult children who remain living at home with their parents after graduating from high school and becoming of working age is Kids in Parents‘ Pockets Eroding Retirement Savings (KIPPERS). In addition to the additional cost of housing and feeding their adult offspring, their parents now have to manage their own finances and retirement plans.

Recognizing Children in Parents’ Hands: Diminished Retirement Funds (KIPPERS)

Some research indicates that the majority of parents find it enjoyable to have kids in the house. They enjoy having their adult children live with them and having the chance to have more meaningful interactions with them now that they are adults. The additional time spent at home often facilitates a tighter relationship. But when they get closer to retirement age, it usually means that the parents wind up spending more and saving less than they otherwise would. Additional costs include extra food to feed more mouths, keeping the larger house after the kids move out instead of downsizing, and other potential costs based on the child’s circumstances, like a second car or spending money. They can potentially put off retirement altogether to support their children and work for many more years. In comparison, a married couple earning two salaries who do not have children at home tend to have more discretionary income and find it simpler to save for retirement. Dual Income No Kids is another term for this demographic (DINKs).

Millennials Seated on Sofas

According to 2016 Pew Research Center research, compared to barely 20% in 1960, nearly one-third of adults between 18 and 34 lived with at least one parent. “For the first time in 130 years, shacking up with Mom and Dad was the most common living arrangement for young adults, edging out being married or cohabitating, living alone, or living with someone other than a parent,” according to Consumer Reports.

According to Pew Research, 52% of American young adults in 2020 were still living with their parents. This was directly related to the COVID-19 outbreak. At 47%, the percentage was still high before the pandemic in February 2020.

Consumer Reports provided these suggestions for parents who are having trouble controlling expenses and saving for retirement:

• Never permit freeloading. Even if they don’t have the funds to pay for them, create goals, discuss family expenses, and give your adult children their portion to ensure they are financially responsible.
• Discuss when they should leave the nest and teach them about living expenses.
• Encourage your kids to build their credit to be eligible for their own space eventually.
• Think about levying rent.

What brings them here?

Living with their parents as adult children can be attributed to various circumstances. The 2008 financial crisis and the coronavirus pandemic have severely impacted millennials. Many young individuals lost their jobs due to these two incidents, delaying their ability to save funds.

Furthermore, many younger individuals cannot support themselves financially from the occupations they can obtain. Living with your parents is more affordable than living alone, especially in places like New York, where rents have increased dramatically over the past 20 years. Add to this the high levels of student debt in the United States.

Conclusion

• KIPPERS stands for “Kids in Parents’ Pockets Eroding Retirement Savings.” This slang term is for adult children who still live with their parents after finishing school and becoming old enough to work.
• They may enjoy having their kids at home, but the extra costs of keeping one or more kids can strain their finances.
• It could also make them put off making big choices like retirement, moving to a better area, or cutting back on their jobs.
• Parents should help their kids get ready for life on their own by setting rules, charging rent, and teaching them how to handle money and debt.