Revival of multigenerational home can build financial security

Despite the healthy job market, paying bills is hard for many. Wages are up, but so are everyday expenses, let alone child care and elder care costs. The harsh calculus of making it in America is a major factor behind one of the most striking yet underappreciated shifts in society: the revival of the multigenerational home.

Nearly 60 million Americans in March 2021 lived in homes with several generations together. That figure is about four times larger than it was in the 1970s, according to Pew Research Center. Money goes further and savings are easier to accumulate when resources are shared. Each generation gains something financially and emotionally from living together. Multiple generations living together is smart personal finances.

Yet the arrangement is still treated as an aberration, a less-than-desirable state in much commentary and entertainment (like the comedy movie "Failure to Launch"). A stigma remains attached to young adults who live at home. The disdainful attitude toward these so-called boomerang kids is they haven't managed to get on with their lives. The stereotype is wrong.

Living at home allows young adults the opportunity to build a strong financial foundation. Perhaps they'll pay off debts, save to buy a home or build a financial buffer that allows calculated career risks. The most articulate proponent of this is Michelle Singletary, personal finance columnist at the Washington Post.

"I'm on a mission to get young adults to stay home into their late twenties and even early thirties," she writes in her book, "What to do With Your Money When Crisis Hits: A Survival Guide." "Rather than a sign that they've failed to set out on their own, I see it as an opportunity for them to save aggressively so that when they do leave, they will have a substantial emergency fund. Or they should stay long enough to pay off their student loans."

What about the older parents? The concern is they're putting their retirement security at risk. Yet in "Boomerang Children and Parental Retirement Outcomes" published earlier this year, three economists found the common perception lacking. They find "young adults who move back home do not seem to affect their parents' health, wealth levels, hours worked or general well-being when compared with other parents."

Surveys also show that the multigenerational home experience is largely positive. The older generation may want to include in their retirement planning the option of creating a multigenerational home.

Chris Farrell is senior economics contributor, "Marketplace"; commentator, Minnesota Public Radio.