The Refilling Nest: Tips for When the Kids (and Parents) Move In

No more empty nests
No more empty nests

Just a few week's ago, many Americans took part in an annual tradition: Cars were packed with clothes and electronics, and parents drove their kids off to college. It's a moment that signals that your children have grown up and are moving out into the world, on their own.

Except that lately, the same kids who left four or five years ago have been returning to move right back in with Mom and Dad.

But U.S. families are experiencing disruptions beyond young people moving in and out of dorm rooms. There's another household shuffling trend emerging as more and more Americans take in their elderly parents to live under the same roof.

In a recent AARP Bulletin, personal finance expert Jane Bryant Quinn noted that at the end of 2011, there were 4.6 million older Americans living with their grown children, nearly 14% more than in 2008. Meanwhile, the number of adult children living with their parents grew by 8% between 2007 and 2010, with two-thirds of them aged 25 to 34. These days, roughly one in five households are shared, up 17% from 2007.

Adjusting to these new living arrangements can be fraught with problems:

  • Older folks moving in with their kids may be upset, feeling they've lost much of their independence.

  • Kids moving back home may feel like failures if they haven't managed to find a job that can support an independent life.

  • The homeowners may feel frustrated that their empty-nest plans -- perhaps to travel or enjoy quieter times -- have been put on hold indefinitely. And they may grow resentful, too, if they find that the new arrangement is costing them more than they expected.

  • There can be power struggles, with one generation trying to wield authority and the other trying to assert independence.

These new phases of our lives can be stressful for all involved, but you can make the transition and the new reality go more smoothly with a little forethought and planning.

When Parents Move In

Quinn cited three primary concerns when parents move in with their children: money, duties, and privacy. Here are some ways to address these issues before they become capital "I" issues:

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• Map out the money arrangement. Come to an agreement on who will pay what, and write it all down. The parents, if able, might contribute a certain sum toward household expenses. Be sure all parties are clear on who is paying for what when it comes to food, home health care services, and so on. If parents pay their children for care, though, that can constitute taxable income. Money transfers can affect Medicaid eligibility, too, so you'd do well to run your plans by a financial advisor and/or lawyer first.

• Discuss household responsibilities. How much help will the parents need, and who will provide it? Will they need to be driven places, for example? Will they prepare some of the family meals, if they can? If there are pets involved, how will they be accommodated? How will vacations be managed? If young children are being raised in the same house, be clear on how involved the grandparents will be, and what everyone's expectations are.

• Plot out some private space. Privacy is cherished by most of us, and in an ideal scenario, parents moving in with their children will have a separate living space of their own -- perhaps a bedroom, bathroom, and sitting room, and perhaps even their own kitchenette. That's usually not possible, though, so give some thought to how parents can be given some space of their own. If a parent is on his or her own now, the issue of having company or overnight guests might even come up.

When Kids Move Back In

Many of the same recommendations above apply when grown kids move back in with parents. You'll want everyone on the same page about who does the laundry and whether overnight guests are welcome.

Both situations share some upsides, as well, such as the chance for family members to get to know and appreciate one another more, and perhaps to ease each other's financial burdens.

Young people living with parents are actually in a great position. If they're out of work, they get a roof over their head, and meals to eat. If they are employed while living with Mom and Dad, they should be able to sock away more money -- money that can be used for retirement, their future housing needs, or to pay down credit card debt. (It also enables them to avoid taking on a lot of debt, which can be very helpful.) For those trying to break into certain professional fields, living at home can make it possible to take on unpaid internships, gaining experience and connections.

Moving in with parents or children is not everyone's first choice, but done right, there can be many benefits to it.

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Motley Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned.