Boomerang Generation: Why Young Adults Are Returning Home and How It Differs in India vs. US

In the United States, those graduating in the 21st century especially have been seeking to return to the homes of their boomer parents. In India, in contrast, living with parents has remained a default option for young adults until they get married or move to another city for a job——an arrangement that isendorsed by tradition.

It is quite common for young adults in the United States to move out of their parents’ home when they start college at age 18. Many of them study in-state (colleges within their state of residence) to benefit from lower fees. Those who are achievers in academics, sports, or art may also be eligible for scholarships. The general understanding is that from that point, young adults fend for themselves without making demands on their parents’ retirement savings. This trend has changed over the years.

We now have the ‘boomerang generation’ that is again staying with their parents. What began as a temporary arrangement has now become a fairly entrenched trend, with a large chunk of middle-income homes reporting the “crowded nest” syndrome. Those graduating in the 21st century, especially, have returned to their boomer parents’ homes. A mix of the financial crises of the early 2000s, rising burden of student loan debt and high interest rates, as well as the high costs of homeownership and rent has contributed to this trend.

In India, in contrast, living with parents has remained a default option for young adults until they get married or move to another city for a job. It is also common for the couple to live with the groom’s parents—an arrangement that is endorsed by tradition as well as offers convenience and support for both the young couple and the parents. In recent years, we see a rising preference among both parents and their adult children to live separately. What are the personal finance implications of this co-habitation? How similar or different are these arrangements in India and in the US?

From ITR filing due dates to right form - know everything about filing your income tax returns for Tax Year 2025-26 or AY 2026-27

View Details »

Same roof, different rules

First, it is very common for American parents to specify a time period till which their adult child will live with them. Usually, the child is looking for a job, setting up something new on their own, has a student loan repayment, or wishes to save money for a down payment on a home. It is also not uncommon for parents to collect a nominal rent. In the Indian context, the arrangement is informal and the duration is not defined. Parents hesitate to ask their child to move out. Children also see it as a delicate or inconvenient matter to bring up, or may choose specific milestones, such as a job change or marriage, to bring up the issue.

Second, tax laws in the US treat monetary transfers of any kind to an adult child as a gift, taxable beyond specific limits for the parents. Indian tax laws do not impose any limits on gifts exchanged between close relatives, such as a parent and child. American parents cannot offer to repay their child’s education loan, buy a house or car, or make monthly allowances without tax implications for reporting, disclosure and staying within exempt limits. Indian parents can do all of these acts of benevolence for their adult children without worrying about taxes. Therefore, parents patronising adult children and meeting expectations for monetary support remain commonplace in India but are exceptional in the US.

Third, the American way of life demands a certain level of independence from adults. There is no expectation that someone else will cook, clean or care for them unless they have taken ill or have expressly asked for help. The cultural expectation is that an adult child living with their parents should not make these demands. Nor will the parents ask or offer such everyday care. Eating out and cooking together would happen, but as part of a plan, not as a routine. In Indian culture, food is a central part of expressing love, care, and concern. Many mothers still cook, launder, and clean for their adult children without complaint. In many households, planning one’s meals without including the others is a strict no-no.

Fourth, India has a low-cost labour model that reduces the burden of household management. It is relatively easy to hire and pay for help to cook, clean, drive and do other routine chores. In the US, most of these services are routinely affordable only to very high-income families. The American household lays down rules on who does the dishes, mows the lawn, takes out the trash, and makes grocery runs; the Indian household has to figure out how to split the costs of these common services between the parent and the adult children.

Fifth, healthcare is expensive in the US. Hence, it is widely understood that adults will be responsible for paying for their health insurance or seek Medicare benefits as eligible and offered by the state. Children beyond a certain age cannot remain on the health insurance of their parents, and parents are not included in the cover their children’s employers offer. In India, it is common for children to include parents in their insurance plan or pay for medical care, including hospitalisation. This is broadly true even if the adult child does not live with the parent. When they live with their parents, the added costs of caregiving are also borne by the adult children.

Ground rules for the crowded nest

How do these broad differences impact the personal finances of the household?

For one, segregating expenses and budgeting for them is challenging when adult children live with their parents. Groceries, utilities and maintenance are all incurred for the house as a unit, and might be difficult to apportion. Personal expenses that are easily identified can be incurred separately. It is not unusual for parents to ask for a monthly payment to cover these costs. It remains culturally easier to do so in the US than it is in India.

Earmarking an amount as rent can help, as some parents may save it for a future large expense of their children. It also helps parents who are retired and have to draw from their retirement corpus. It can be a nominal amount, but setting it aside helps both sides.

Expenses that can’t be subsidised

It also helps to define the subsidies, and ensuring both parties agree to them right at the start can help avoid future conflicts. Using the car and the driver, utilising the parents’ services for babysitting and child care, are all instances of subsidy that blow up over time. Where an expense can be specifically earmarked and incurred by the party using the service, it is better not to subsidise it.

The young adult has a higher requirement for long-term savings and asset building. Older parents are at a stage where they would draw down what they have saved over long working years. Differences in life stage will result in different orientations towards spending, borrowing, saving, investing, and giving. Keeping these financial decisions independent helps both sides.

Merging two households into one and hoping that the arrangement would be without friction is a fantasy, whether in India or in the US. Establishing ground rules and working within the cultural context can help understand what might work and what might not.

The Author is Chairperson, Centre For Investment Education and Learning

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

(Join our ETWealth WhatsApp channel for all the latest updates)