• “KIPPERS” (Kids in Parents’ Pockets Eroding Retirement Savings) describes adult children who continue to live with parents after finishing school and entering the workforce. The phenomenon is also called “boomerang children.”
– Living with adult children often strengthens family ties, but it can materially raise parents’ living costs and reduce retirement savings or force later retirement.
– Causes include weak early-career wages, high housing costs, student debt, and economic shocks (2008 crisis, COVID-19). Rates of young adults living with parents increased notably in recent years.1,2
– Families do best when they set clear expectations, use written agreements, and incorporate the situation into household and retirement planning.
What KIPPERS means and why it matters
“KIPPERS” is a slang term for adult children who return to or remain in their parents’ home rather than establish independent households. For parents nearing or in retirement, an extra adult in the house typically means:
– Higher recurring living costs (food, utilities, transportation, insurance, household supplies).
– Pressure to keep a larger home rather than downsizing, which raises housing and maintenance expenses and reduces potential home-equity-based retirement strategies.
– Possibility of funding an adult child’s car, health insurance, or discretionary spending.
– Delayed retirement or part‑time work in retirement to cover increased expenses and support the child.
These financial effects can erode retirement savings, reduce the buffer against health or market shocks, and complicate long-term plans.
Scope and recent trends
– Pew Research found that by 2016 nearly one-third of 18‑ to 34‑year‑olds lived with at least one parent—up from about 20% in 1960.1
– The COVID‑19 pandemic drove this rate even higher: Pew reported about 52% of young adults living with parents in 2020 (47% in February 2020 before the pandemic).2
– Families and parents often report positive social outcomes from increased time together, but the financial tradeoffs can be significant.
Why adult children often live at home
– Early-career job losses and slow wage growth reduce ability to rent or buy independently.
– High housing costs in many metro areas make independent living unaffordable.
– High student-loan burdens reduce disposable income and savings ability.
– Economic shocks (recessions, pandemics) result in temporary or extended returns to the parental home.
Practical steps for parents (to protect retirement goals)
1. Assess the real cost
• Create a household budget that separates fixed home costs from marginal costs attributable to the adult child (food, utilities, transportation, increased insurance, car costs). Estimate monthly and annual impacts on retirement savings needs.
2. Set clear expectations before or immediately upon move-in
• Decide and communicate whether the arrangement is temporary or longer term.
• Establish house rules (contributions to chores, noise, guests) and financial expectations (rent, utilities, savings goals).
3. Request financial contributions tied to ability and local costs
• Ask the adult child to pay market or below-market “rent” or a flat contribution for groceries/utilities, earmarked to parents’ retirement savings or household costs.
• If the child cannot pay cash, consider in-kind contributions (child handles groceries, utilities account, lawn care).
4. Treat the contribution as part of your retirement plan
• If contributions free up parental cash flow, redirect that amount into retirement accounts (401(k), IRA, Roth if eligible) rather than into discretionary spending.
5. Consider downsizing or other housing moves sooner rather than later
• Analyze whether you can right‑size housing (smaller mortgage/maintenance costs) while still accommodating the child for a defined period or encourage them to find an affordable unit nearby.
6. Protect retirement resources and legal status
• Avoid using retirement accounts for ongoing household expenses whenever possible (withdrawal penalties and tax effects).
• Consider consulting an estate attorney about tenancy in common, leases, or cohabitation agreements if the child will live there long‑term.
7. Plan for contingencies and set a timeline
• Agree on a realistic timeline and milestones (job secured, savings target met, independent housing attained). Revisit and update every 3–6 months.
Practical steps for adult children (to transition toward independence)
1. Contribute financially and to household tasks
• Pay an agreed amount in rent or utilities and cover assigned household responsibilities.
2. Build a savings plan with targets and timelines
• Create a short-term emergency fund (1–3 months), then target moving costs and an initial rent/security deposit fund (often 2–3 months’ rent).
3. Reduce debt and increase income
• Prioritize reducing high‑interest debt and seek career/earnings growth (side gigs, certifications, networking).
4. Seek affordable housing solutions
• Consider roommates, smaller units farther from city centers, or housing subsidies/programs if eligible.
5. Establish a clear exit plan
• Agree on milestones (job, savings, debt-to-income ratio) that trigger moving out and revisit progress regularly.
For the family together: a suggested written agreement
– Move-in date and expected duration.
– Financial contributions (amount, payment schedule) and how funds will be used.
– Division of household responsibilities and expectations for guests/partners.
– Education/job search and career-development expectations for the adult child.
– Timeline for review and consequences of missed commitments (e.g., temporary plan extension vs. move-out).
– Signatures from both parties and a scheduled date for the first review.
Sample financial mechanics
– Example: If an adult child’s presence raises annual household costs by $6,000, parents could require a $500/month contribution and direct that amount into a savings or retirement account. If the parent is still working and has employer match room, contributing $500/month to a retirement account can preserve retirement progress.
– If the adult child cannot pay full rent, set a lower contribution plus a requirement to save a fixed portion of earnings toward a move-out fund.
When to involve an outside professional
– Consult a financial planner if you’re unsure how changing household composition affects retirement income planning, Social Security timing, or required retirement savings.
– Consult an attorney for complex property arrangements, cohabitation agreements, or when large transfers of assets are under consideration.
– A tax professional can advise on implications if you claim the child as a dependent or if household changes affect deductions/credits.
Emotional and relational considerations
– Recognize that many parents report positive emotional outcomes from time with adult children, but mixed feelings are normal.
– Open, respectful communication prevents resentment; structure removes ambiguity.
– Revisit agreements at scheduled intervals to adapt as careers and needs evolve.
Bottom line
KIPPERS can be both a meaningful family experience and a risk to parents’ retirement readiness. The financial impact can be managed by measuring direct costs, establishing firm but fair expectations, formalizing a plan with timelines and financial contributions, and integrating any changes into retirement planning. When handled proactively and transparently, multigenerational living can work for both parents and adult children without permanently undermining retirement security.
Sources
1) Pew Research Center, “For the First Time in the Modern Era, Living With Parents Edges Out Other Living Arrangements for 18‑ to 34‑Year‑Olds,” accessed July 26, 2021. /
2) Pew Research Center, “A Majority of Young Adults in the U.S. Live With Their Parents for the First Time Since the Great Depression,” accessed July 26, 2021. /
3) Consumer Reports, “House Rules for an Adult Child Living at Home,” accessed July 26, 2021. /
4) Investopedia, “Kids in Parents’ Pockets Eroding Retirement Savings (KIPPERS),” definition and discussion.
(a) draft a one‑page written move‑in agreement you can use with your child, (b) run a simple budget worksheet for your household showing the marginal cost of a KIPPER, or (c suggest conversation scripts for initiating the agreement.