Boomers' Savings Dwindle as Kids Return to Nest

At age 55, Kathleen Walker, who works at an insurance agency, and her husband, are still providing financial assistance to two of her three grown children. The oldest, age 38, lives in his own apartment, but makes only $12 an hour as an electronics technician at a local family fun center. Since he also pays child support, his wages barely cover basic necessities, so Walker contributes to gas and groceries. The youngest, age 23, is an unemployed part-time student and lives in the Walkers' house with her boyfriend, who comes from a broken home. Neither pay rent or contribute to household expenses. "I'm angry, apathetic, discouraged, and generally disgruntled that I'm spending my declining years working to support them when I should be enjoying life," she says.
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Walker's situation is becoming far more commonplace, largely due to extreme financial hardships among the younger generation. "We're seeing greater numbers of empty nesters not being empty nesters," says Jean Setzfand, AARP's vice president for financial security. Recent Census data shows that 5.5 million young adults moved back with their parents in 2010, a 15 percent increase from 2007. The percentage of men ages 25 to 34 living in their parents' home rose from 14 percent in 2005 to 19 percent in 2011, while the gain for women was 2 percent.

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Much of that can be attributed to a widening wealth gap between generations. A report this month by the Pew Research Center found that in 2009, the median net worth of households headed by an adult age 65 or older was 42 percent more than that of their same-age counterparts in 1984. The net worth of a typical household headed by an adult under the age of 35 in 2009 was 68 percent less than that of their same-age counterparts in 1984. The current age-based wealth gap "is unprecedented," the Pew report says, ballooning from boomers making 10 times more in 1984 to 47 times more by 2009.
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Though it's not unusual for the older generation to be in better financial shape as they accumulate wealth with age, young adults "just aren't keeping up with the gains of older households," says Richard Fry, senior economist for Pew. He says delaying marriage, which is associated with building a nest egg; spending more time in school; and high unemployment among young adults are big factors. It's unclear whether this situation will just delay the time it takes for the younger generation to accumulate wealth, says Suzanne Bianchi, a professor of sociology at the University of California, Los Angeles, or if they'll never catch up. But she says that the affluence of their parents' generation also gives them the leeway to take more time before entering the work force. "You can take more risks if you have that parental safety net," she says...

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By Julie Halpert, The Fiscal Times