Keeping Your Kids Afloat

Six months after Sue and Jim Pearson of Washington, Indiana, were married, Sue's daughter, Kimberly, 22, called and said, "I have nowhere else to go. I'm coming home." Kimberly had been living with her fiancé and his parents. Then the engagement ended, and her daycare-center job didn't pay enough to support her.

When Russ Phillips was 19, "he heard there were jobs in Utah, so he just took off," says his mother, April Phillips, of Reston, Virginia. Armed with a high-school-equivalency diploma, Russ found a series of menial jobs—waiting tables, sorting cans, working as a ranch hand. Sometimes he had to ask his mother to help out with money for food, rent, or a car payment. "I never sent him enough to come home, only enough to solve the problem," says April, an elementary-school teacher.

Families like the Pearsons and the Phillipses are popping up everywhere these days as young adults confront higher hurdles on the path to independence. Since 1970 the number of adults ages 25 to 34 living in a parent's home has ballooned by more than 50 percent, to 39 million—and parents, on average, are spending an inflation-adjusted 13 percent more on their grown offspring, reports a University of Michigan study based on Census Bureau data. For many parents the financial strain of this longer haul means postponing retirement, raiding savings, or taking on debt in an effort to help their kids. For all, it means added worry.

"This is a cultural sea change," says Linda Perlman Gordon, a psychotherapist and coauthor (with Susan Morris Shaffer) of Mom, Can I Move Back In With You? (Tarcher/Penguin, 2004), of the phenomenon of parental involvement in grown children's lives. She and Shaffer use the termadultescenceto describe the prolonged period today's young people spend as no-longer-adolescents and not-quite-adults.

Economic pressures have certainly contributed to greater dependence on the parental pocketbook and homestead. Entry-level salaries have not kept pace with inflation. A booming housing market has made setting up a household beyond the reach of many young adults. And education costs are spiraling upward, saddling the average college graduate with $18,900 in student loans, a 66 percent gain since 1997, according to a study published by loan provider Nellie Mae Corporation.

Some observers think there's more at play than sheer numbers, however. Grown kids are more dependent on their parents' money because they have been raised with a sense of entitlement, they say. "Baby-boomer parents tend to be freer with their money than were their own parents, who grew up in the Depression," points out Jane Adams, author of When Our Grown Kids Disappoint Us (Free Press, 2003).

"I see young adults struggle with this notion of stepping backward," says Nathan Dungan, president of Share-Save-Spend, an organization that teaches financial responsibility to families. "They are the first generation that's been marketed to since they were little children. They're used to their own rooms and bathrooms. They're used to eating certain foods and driving in certain cars."

And they may not know what they're getting into when a bank offers them a credit card at age 18. Little wonder card balances average $5,000 for 25- to 34-year-olds today.