California: Record Numbers of 50 to 64 Year Olds Shacking Up with Parents.

A recent study conducted by researchers at UCLA have found that the number of 50-64 year olds in California moving back into the homes of their even older parents has ballooned by 67% over the past 7 years. The study attempted to count only those who moved back in due to economic necessity, as opposed to other reasons such as caring for an aging parent.

As the LA Times reports:

For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.

The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

“The numbers are pretty amazing,” Wallace said. “It’s an age group that you normally think of as pretty financially stable. They’re mid-career. They may be thinking ahead toward retirement. They’ve got a nest egg going. And then all of a sudden you see this huge push back into their parents’ homes.”

For most of these people, the nest egg was never large enough. A proper nest egg should be large enough to sustain your current lifestyle for at least one year. For most people, that means something over $100,000 at the very least (and even that number is dangerously low). These people have not saved anything close to that. A mere $25K in the bank ain’t gonna cut it.

On-the-whole, the per household savings rate in America has plummeted over the past 20 years:

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Meanwhile, average families have accumulated a massive amount of debt over the past 20 years:

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The 50 to 64 year olds moving back in with their own parents have already given up hope:

Debbie Rohr lives with her husband and twin teenage sons in a well-tended three-bedroom home in Salinas. The ranch-style house has a spacious kitchen that looks out on a yard filled with rosebushes. It’s a modest but comfortable house, the type that Rohr, 52, pictured for herself at this stage of life.

She just never imagined that it would be her childhood home, a return to a bedroom where she once hung posters of Olivia Newton-John and curled up with her beloved Mrs. Beasley doll.

Driven by economic necessity — Rohr has been chronically unemployed and her husband lost his job last year — she moved her family back home with her 77-year-old mother.

“I said ‘Mom, I’m so sorry but I don’t know what to do,'” Rohr said. “I dreaded it. If it wasn’t for my boys I wouldn’t have done it. I would have lived in my car.”

It gets downright depressing:

Janine Rosales… moved into her mother’s San Francisco home two years ago after a career of mostly low-paying jobs left her unable to afford the city’s towering rents.

For Rosales, 53, it represented a personal defeat, an unofficial marker of unmet goals in life.

“I sit here sometimes and I see baby pictures of myself and my teenage years and remember all the dreams I had,” Rosales said. “I never thought I’d end up where I am.”

This represents a larger ticking time-bomb. These are the people who have lost their jobs and already lost hope; but there are still legions of lower-middle class families now living permanently on the brink. A general rule of life is this: people will fight tooth and nail to avoid going down a social class. There are millions of American families who lack significant savings and face higher costs-of-living, but refuse to make the necessary lifestyle cuts to preserve their savings and long-term solvency because it requires a perceived drop in social class. For example: insisting on living in a high-rent area or being sucked dry by a huge mortgage, when that same family could live far more within their means inside a cheaper area and living space. Most people do not want to make changes like this, because it requires the appearance of moving down to the lower class.

If a second recession hits (which is a distinct possibility, when interest rates begin to rise), another wave of these lower-middle class families on the brink will be pushed over the edge. They will have no other choice but to accept a step down in lifestyle. Being forced over the edge this way is what causes people to lose hope.

For most older folks in this situation, it is too late to do much of anything, financially-speaking. A lifetime of poor decision-making has a high price. This does not mean they should give up hope on life. There is always purpose and fulfillment to be found in the world. They can get involved in volunteer work. Volunteering with children always cheers me up. They could try to start a small-scale business. They can find something. But financially-speaking, these people need to come to grips with the fact that they will probably never again climb up the economic ladder. The sooner they accept this fact, the sooner they can rebuild their lives.

For younger folks and those older folks not yet pushed over the edge, begin living within your means and cutting costs wherever possible while you still have time. This means accumulating savings and avoiding debt. Keep in mind my golden rule of personal finance: never go into debt for a depreciating asset.

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One Comment on “California: Record Numbers of 50 to 64 Year Olds Shacking Up with Parents.”

  1. Kiersten Marek April 23, 2014 at 2:11 am #

    Reblogged this on Kmareka.com and commented:
    Yikes!

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