The term kids in parents’ pockets eroding retirement savings (KIPPERS) is a slang expression that has a deeper financial lesson both for adult children and parents. Adult children who remain at home with their parents after completing education and reaching working age are referred to as "KIPPERS," which is an abbreviation for Kids in Parents' Pockets Eroding Retirement Savings (KIPPERS).
Parents have to do a balancing job between managing financial responsibilities and their own love for children. Their management of the current phase prepares them for a safe and enjoyable retirement with additional savings in hand to meet emergencies.
This is always a tough decision for parents to make who enjoys the company of their children and don’t want to take the difficult decision of asking them to leave the house. However, their prolonged stay causes financial burden.
It leads to changes in lifestyle with several cost-cutting measures and other individuals either leading a frugal lifestyle or entirely giving up their education to save money.
Irrespective of the stage, they should come forward and guide their children of taking the next step in life and leading autonomous life.
According to multiple surveys, the majority of parents report that having KIPPERS in the home is a positive experience for their children. They like sharing a home with their adult children.
Nonetheless, as the parents near retirement age, they tend to spend more and their savings diminish drastically than they would if they were not doing so. Additionally, they may put off making major life choices like moving in a smaller house, relocating into a better environment, or perhaps retiring altogether.
On the other hand, lets take the example of a married couple with two sources of incomes who does not have dependents at home. They will find it easier to make investments, enjoy their lifestyle and even plan for a comfortable life post retirement.
Pew Research had an interesting study on the lifestyle of millennials when compared to that of the 1960. It highlighted that over 1/3rd millennials in the age group of 18-23 preferred to stay with their parents unlike the 1960, that had only just a meagre 23 percent staying back.
This has put tremendous pressure on the parents who are forced to spend out of their retirement savings and as a result have very less amount planned for emergency situation. The expenditure must be shared and children must be encouraged and assisted to take the step towards independence.
Charging rent on the KIPPERS to encourage them to work.
Encourage them on building credit score and show them its benefits.
Discuss about future goal setting and financial planning.
You can begin by including one step at a time.
There could be several factors that contribute to this complex reason. One of the reasons is inflation, mortgage, and unemployment. However, the Pew research pointed out that Millennials could be staying back at their parents’ home not due to unemployment alone.
It has been observed that while employment opportunities remained available for the vast majority of youth, there could be lack of poor payment salaries that has prevented them to live independently.
When compared to 1960s, the cost of living has increased dramatically and today, the youth struggles to meet their expenses due to rising inflation and an average salary. Real estate prices have further contributed to this problem as the prices of land and apartments continue to increase dramatically.