The impact on older people when adult children move home

Western Australia has wonderful resources for parents of young children. You can phone Ngala any time of the day or night. Or, you can rely on your new parents group for support for common parenting challenges. But what happens when you’re not young and neither are your children?

Australia’s worsening housing affordability [1] and homelessness crisis [2] are producing hidden victims: older people with adult children unable to afford a home of their own. In Western Australia, where rental vacancy rates are at record lows [3] and home prices remain high, more adult children are moving back in with their parents out of financial necessity – sometimes with children of their own in tow.

Trend for adult children to live with their parents

Data from the 2021 Census revealed 456,500 people 25 to 34-years-old lived with their parents [4]. That’s an increase of nearly 17% since the 2016 survey. The Household, Income and Labour Dynamics in Australia (HILDA) survey shows the number of young adults living with their parents has been rising steadily in recent decades. In 2024, 54% of young men and 47% of young women aged 18 to 29 years old still live with their parents [5].

Economic strife creates a boomerang generation

According to research by Finder, one in 10 Australians – equivalent to 662,000 households – experienced a trend of adult children moving home in the 12 months ending August 2023 [6]. While this can be a positive experience, it can also create challenges for older parents. A few of the top reasons for moving back relate to housing affordability:

• 36% save money
• 30% rent became unaffordable
• 30% save money for a house deposit
• 23% caring requirements for parents
• 14% job loss

Risks for older people when adult children move home

For older Australians, having adult children move back home can disrupt retirement plans and put financial security at risk. Key pitfalls include:

• Increased living expenses cutting into fixed incomes
• Adult children not contributing enough financially
• Inability to downsize or sell your home because your children and grandchildren are still living there. This can disrupt your retirement planning or your ability to move into a retirement or lifestyle village, or a residential aged care home.
• Damage to parent-child relationships due to money issues and lack of privacy and independence. If the living arrangement extends past a temporary measure, the risk increases.

While many older parents want to help their adult children in a time of need, this arrangement can lead to financial, legal and emotional issues if not handled carefully. If the adult children struggle to get back on their feet and end up staying indefinitely, older people can find themselves in a difficult position, especially if they are on a fixed income.

Impact on pensions and government subsidies

If an adult child moves back in and contributes financially to the household, it could be considered additional income for older people. This can potentially affect eligibility for the Aged Pension or rental assistance for older people.

Inheritance and estate planning issues

If parents add an adult child to the title of the family home, it could lead to unintended consequences regarding inheritance. The child may end up with a larger share of the estate than intended. If the home represents a large portion of the parents’ estate, leaving it to live-in children may result in an unequal distribution among other children, leading to potential disputes and legal challenges.

Risk of financial abuse

The National Elder Abuse Prevalence Study: Final Report [7] showed 2.1% of the 7,000 respondents aged 65+ experienced financial abuse, mainly committed by children (33%) or other family members. Of those:

• 42% were pressured into loaning or giving money, possessions or property
• 34% had money, possessions or property taken without their consent
• 31% did not receive contributions to household expenses as had been previously agreed

Accommodating adult children in your home

To protect their own interests when providing housing to adult children and grandchildren, older people are advised to:

• Set clear expectations around financial contributions, chores, and timelines for moving out.
• Consider charging rent covering the increase in household expenses and have adult children sign a formal lease.
• Seek independent legal and financial advice before making changes to wills, deeds, guardianships, enduring power of attorneys (EPA), or any other estate planning documents.
• Pursue family mediation if issues arise. Contact Centrelink to understand what impact new living arrangements have on pension eligibility.
• Reach out to community and housing support services for planning help.

Multigenerational living can come with many benefits including improved family relationships, strengthened ties between grandparents and grandchildren [8], and additional support around the home and with finances. Before potential problems arise, it’s vital to put formal agreements in place when adult children move in. With the housing crisis showing no signs of abating [9], more older Western Australians may find themselves in this challenging position in the months and years to come. Getting support early on – and knowing where to find information – is key to protecting the financial security and wellbeing of older parents.

If you need help understanding your rights, Advocare can help. Get in touch if you have questions about multigenerational living and how it impacts your life.

References?

[1] https://www.aihw.gov.au/reports/australias-welfare/housing-affordability

[2] https://www.oldertenants.org.au/sites/default/files/ageing_in_a_housing_crisis_-_full_report.pdf

[3] https://reiwa.com.au/the-wa-market/rental-vacancy-rates/

[4] https://www.abc.net.au/news/2023-08-31/increasing-amount-of-young-people-living-with-families/102800264#

[5] Roger Wilkins, Esperanza Vera-Toscano and Ferdi Botha (2024) The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 21. Melbourne Institute: Applied Economic & Social Research, the University of Melbourne. https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0008/4841909/HILDA_Statistical_Report_2023.pdf

[6] https://www.finder.com.au/news/boomerang-generation-2023

[7] Qu, L., Kaspiew, R., Carson, R., Roopani, D., De Maio, J., Harvey, J., Horsfall, B. (2021). National Elder Abuse Prevalence Study: Final Report. (Research Report). Melbourne: Australian Institute of Family Studies. https://aifs.gov.au/sites/default/files/publication-documents/2021_national_elder_abuse_prevalence_study_final_report_0.pdf

[8] Baxter, J. (2022). Grandparents and child care in Australia (Families in Australia Survey report). Melbourne: Australian Institute of Family Studies. https://aifs.gov.au/sites/default/files/2022-07/Grandparents%20and%20child%20care%20in%20Australia_0.pdf

[9] https://www.curtin.edu.au/news/media-release/housing-affordability-is-deteriorating-and-theres-no-end-in-sight/