No empty nest, just a very crowded house

What happens when the boomerang generation refuses to cut the umbilical cord?

The trend forecaster Bernard Salt calls them KIPPERS: Kids In Parents' Pockets Eroding Retirement Savings. He's referring to the adult children of baby boomers who still live at home with mum and dad, paying no rent, enjoying meals on demand and driving the family car.

Instead of downsizing from the family home to an apartment and pouring the spare cash into super, these boomer parents, aged 45 to 60, are still working at full-throttle to feed, clothe and entertain their "adultescents" - plus assorted hangers-on.

"The household does not shrink, it actually inflates," says Salt. He devotes a section of his new book, The Big Picture, to the generation Y "helicopter kids", aged 15 to 30, who hover around the family home.

"There's two parents in their 50s, two 20-something kids, plus their partners, six cars, a cat, a dog and perhaps an orbiting grandmother. This is not an empty nest, this is a crowded house."

It's a growing trend. In 1976 only 21 per cent of people in their 20s lived with their parents, but this jumped to 30 per cent by 2001, according to the Australian Bureau of Statistics.

The most recent figures, from David Chalke's 2005 AustraliaSCAN survey, show that 36 per cent of 20- to 29-year-olds are still in the parental home.

Chalke, a social analyst, says the main reason is generation Y's deferment of traditional adult markers - getting married, buying a house and having children - plus the rise in tertiary education, with close to 40 per cent of 20- to 24-year-olds undertaking some sort of study.

Most baby boomers left home at 18 and were married with children and a mortgage by age 25, but their children are deferring marriage and kids until at least 30.

There's also the argument about soaring house prices locking generation Y out of the market, but the experts say this is a distraction.

"The house price argument is as much an excuse as a reason - many of them could afford to buy a one-bedroom apartment," Chalke says.

"It's really a combination of convenience, not wanting to commit to anything, and compliant parents."

"Gen Y stays at home because it's easy. Full stop," says Peter Sheahan, an author and consultant on workforce trends and generation Y.

"The hell at home that previous generations had - we haven't had that. We like mum and dad, we can have sex and drink at home - why would we move out?" (In fact, Sheahan has behaved much more like a boomer, leaving home at 17 and now, at age 26, married with two kids and his own home.)

But what about the boomers? Why are they putting up with all this extra cooking, cleaning and washing - not to mention lost cash that should be going towards their retirement savings - to support a gaggle of freeloaders?

"They love it, they absolutely love it," Salt says. "It's part of the boomer culture, to feel important, to feel the centre of the universe." He says having the kids at home allows the boomers to cling on to their youth and feel needed and in control, rather than obsolete.

"The boomers are having to face up to their own mortality," Chalke agrees. "The last thing they want to be is empty-nesters. They're encouraging the kids to stay."

Ryan Heath, the 25-year-old author of Please Just F*** Off, It's Our Turn Now: Holding Baby Boomers to Account, also sees it as a two-way street.

"It's an excuse for the kids not to grow up and think for themselves," he says. "And it's about the boomers delaying the next stage of their lives. They're very well-intentioned, but I think it's really an ego boost for them."

Boomers may love having the kids around but plenty would like to see a bit more of a financial contribution, according to the financial planner Susan Jackson, executive director of the Women's Financial Network.

"I know from talking to my clients that it's a real moral dilemma. They want to have the discussion with their kids about it being more of a commercial arrangement - but they're not having that discussion.

"They worry that it starts to sound materialistic when they talk about the cost of filling up the car and the utilities bills. There's [a feeling] that you're supposed to nurture your children but you also have to look after yourself."

Jackson believes the financial issues are less about the kids thwarting the boomers' urge to downsize, and more about the extra cost of supporting them.

"I think downsizing might be a bit of a furphy put out by apartment developers. We get clients talking about downsizing, but the majority are not going to do it until they physically retire.

"But when you go through their cash flow, look at their expenses and how to reduce them, then you have the discussion with them about how much it costs to have the kids at home. For a lot of them it is a reality check."

For parents who feel uncomfortable about moving to a more commercial arrangement, Jackson says a good way to start is to sit down with the kids and show them how much it costs to run the house.

She also suggests that even parents who don't really need the cash should charge their offspring board and perhaps secretly put it into an investment account and return the proceeds to the kids when they move out.

She doesn't exactly practise what she preaches, however. Last year, Jackson's 26-year-old daughter, who is working full-time and studying at night, moved back in with her - rent-free.

"I was happy for her to come back home, but the reality is, it's subsidised," Jackson says. Her daughter pays half the utilities bills, does the gardening and occasionally puts food in the fridge.

"We did have some vague discussion about her contributing but she's an only child and whatever I have will end up with her anyway. She's really just getting part of her inheritance early by living at home.

"She's got the cost of her study, she works incredibly hard and she's just taken a sideways step in her career and her income has dropped. I would like to see her saving a bit more but for that age group it's such a foreign concept."

The financial planner Robin Edwards, a senior money manager with Superwoman, is concerned about the long-term effect on gen Y of their spendthrift ways.

"They need to recognise that someone is picking up the tab. That's the thing that worries me a bit," says Edwards, who recommends that parents charge board. "Adult children need to see there is a cost to every decision they make.

"They need to see there is a choice between being able to pay their board and going out on both Thursday and Friday night."

Overall, Edwards says, most of her baby boomer clients are pretty happy to have their adult children at home and many of the kids are buying investment properties rather than spending their entire disposable income on the high life.

Her boomer clients are aware that having the kids at home affects their lifestyle, and they often talk of delaying that upgrade of the car or a big overseas trip "until the kids move out".

"But they don't talk about it with any regret," Edwards says. "They feel like it's a real contribution."

And it's a contribution that many boomers feel they can afford to make, says Bernard Salt.

"They're quietly confident of their balance sheet. They've got an unencumbered house worth $1.8 million, which they bought in 1978 for $60,000.

"When they retire, they'll sell the house and flick $100,000 to each kid to try and keep them in Melbourne [or Sydney]."

Salt expects the true downsizing will take place from 2011 onwards, when the boomers begin to retire.

But he says he has concerns for their generation Y kids, who will be cast out of the family home and into the real world.

"They've only known a world of prosperity," Salt says, describing them as the luckiest generation ever. "They don't know about manoeuvering and competing and persisting and saving. They want it all and they want it now.

"What happens to these overindulged kids? At the end of this decade life will deliver them a knee to the groin when the economy turns and they are finally kicked out of home because the parents really are downsizing. It's like putting a domesticated wild animal back into the jungle."

FISCAL FACTS

Financial planners say the going rate for boarding at home is $100 to $200 a week.

Forty-nine per cent of generation Y think home ownership will not be affordable in their lifetime.

LATE STARTERS

Most nights, Avril Henry's four-bedroom North Shore home is full. Her two daughters, Melissa, 22, and Genevieve, 18, are students and live at home, and Genevieve's boyfriend Sean Ali, 20, stays over several times a week. Then there are her 22-year-old "adopted twins", friends of Melissa's, whose parents died when the twins were 17 and who pop in for dinner and the occasional sleepover.

"My house is not really big enough for five kids and three dogs," the single mother says.

Henry's daughters do not pay board but she has asked that when they start working, they give her $100 a week to put into a managed fund.

"I would rather know where my kids are, who their friends are and that they're safe," Henry says.

She knows better than most boomer parents exactly what makes generation Y tick. Henry consults to workplaces on the issue and has just released a survey on The Who, When, What and Why of Gen Y.

"The bad news is, they will stay at home until they get married. The good news is, 70 per cent of them plan on getting married and having a child before 30.

"I joke about trying to move to an apartment in Balmain but I know it's not going to happen."

RETIREMENT POSTPONED

Philip Morrow is less indulgent than many baby boomer parents. His two daughters, Sarah, 28, and Jennifer, 24, pay 10 per cent of their gross salary as board to live in the family's Hills District home in Sydney's north-west.

"They used to grizzle about it in the early days," says Morrow, 55. "We'd seen problems in other families [which didn't charge board or charged a flat rate no matter what they earned]."

Morrow, a facilities manager at a high school, says he would love to retire if he could afford it, but after completing extensive renovations to the family home last year will probably work five more years.

Regardless of whether the girls stay at home, Morrow and his wife, Barbara, have no plans to downsize as they are happy where they are.

As for the extra costs of having four adults in the house, he says: "What would we save if they weren't here? Maybe something on bills but not a lot.

"We all get on very well together."

STAYING MUM

At age 24, John Gambros has been working full-time for three years as a media strategist, but he's still very happy living at home with his parents and two sisters, aged 18 and 21, in Sydney's eastern suburbs.

He doesn't pay any board, but says payback is expected in other ways, such as driving his sister somewhere or filling in as a waiter at his father's restaurant.

Despite his $60,000-plus salary, Gambros says he still has a few thousand dollars on his credit card. He's paying off HECS at $400 a month, and is saving for a six-week trip to Europe in June.

As well as the financial advantages, Gambros says the domestic support is vital. "I've got a good Greek mother who cooks, cleans and does a lot for me. And I'm at a point in my career where I need to have the freedom to work late then know dinner's there in the oven. I've got a pretty good [situation] at the moment."