She’s 58. He’s 62. The thing in the basement is 26.
“Steve’s a good kid,” mom says, “and he definitely tries to help around the house.” Dad sees it differently. “He contributes nothing, and expects a boatload. I’m giving him one more year.” So, next summer, Mars and Venus will clash up there on the main floor. I’m betting Steve stays.
One US study says adult children at home – about 23 million of them, up a staggering 18% in the last decade – are seriously holding back house sales. Household formation is down, because fewer twentysomethings get married these days, having extended adolescence and dependency. In fact, it’s estimated the crash and fallout of 08-9 has kept about 2.4 million of them from moving out, renting or buying.
And they like it. Seventy-eight per cent of the basement dwellers say they’re cool being at home. No news to Steve’s dad. “When I was his age I’d been working for five years and had a wife and a crappy house and no money. Not only am I paying for his food, I just bought his insurance and I pay for his car. It’s ridiculous.”
“But,” mom says, “how’s he ever going to get a good job without being able to drive to interviews? And he’s only been out of school a year. Why are we pushing?”
The conversation took place in my office some days ago, and degraded fast. It was supposed to be a session to review their retirement preparedness, but it ended up being all about Steve. No wonder. The little moocher is sucking off his parents’ net worth at one helluva clip. If it weren’t for him, there’d be a thousand more a month to invest, instead of seeing it go for food and car payments. Worse, they’d have sold the real estate by now, downsized into a condo and have at least $400,000 to invest. It’s money desperately needed, since their printing business is now marginal, and they have no pensions.
Without those funds, I told them, they’ll be in tough shape. Especially if they miss this window of opportunity to bail from that suburban house before the lights start going out in 905.
The latest federal stats (2011) paint an amazing picture. Almost 43% of all twentysomethings in Canada live with their parents. Over 63% of all guys 20 to 24 are still at home. A quarter of the moochers returned to the nest after initially leaving. And the problem of basement-dwellers seems most acute in Ontario.
Parents, despite their own financial messes, can’t say no. A recent Environics survey found 43% allow their adult offspring to live at home rent-free. A third, like Steve’s dad, are paying for major purchases like cars and computers. And 20% are picking up their kids’ credit card payments – about the same number who told researchers they would “consider putting their own security in jeopardy to help out.”
They’re already doing a fine job of it.
Yeah, yeah, youth unemployment may be 14% today – double the national average – but the financial crisis brewing for millions of Boomer parents is massive. Over 70% don’t have corporate pensions to look forward to. Rock-bottom interest rates and investing ignorance have punished many. Household debt’s at a record level. More people are retiring with mortgages than at any time in history. RRSP contributions have cratered in the past decade. Wage gains are trailing inflation, so every year there’s less to put away. Life expectancy is shooting higher. And now the one asset everybody gambled on – real estate – is facing a decidedly troubled future.
It was the perfect Boomer storm, even before these wrinklies found out they have career children. For Steve’s parents, supporting him and his lifestyle is a burden they can scarcely meet. The odds the kid will pay them back once he finds work are zero. That’s about the same as his parents ever being frank and honest with their son about their finances. Steve will keep sucking. They’ll keep dodging.
When they left my office, Venus cared more about Steve than fate. Mars decided the fight wasn’t worth it. The choice they’ve made will swell their own risk far in excess of the amount it decreases their son’s. Financially, it’s indefensible. The kid should go. He’ll find a way to survive. A 62-year-old guy in a dying small business, not so much.
As for Steve, I’m sure he has no clue. Parents are eternal. They live on air. You take from them. They don’t mind.
In twenty years I wonder if he’ll look at his runaway taxes, and connect the dots.