Reply to Michelle Singletary - WAPO finance expert has three failure to launch kids in their 20's living at home

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[quote=Anonymous][quote=Anonymous]I agree it is not failure to launch and it is financially savvy, but it is a little weird. Seems like an extension of helicopter/overbearing parenting. Doesn’t even one of those kids *want* some independence? To have experiences of living with roommates, taking care of your own place, having friends over, having relationships where the SO can spend the night? [b]Or is life just about earning money and socking it away?[/b]

Personally if I really wanted to encourage retirement savings, in lieu of this arrangement I  would rather work out a deal with my kids where they send me proof of their contributions to retirement accounts and I transfer the same amount to them. [/quote]

Oh please, living at home for a few years while single, after college, in no way means someone is obsessively hoarding money.  Those early years are notoriously difficult financially because of a combination of relatively low entry-level salaries and high “start-up” life expenses:

1). You only have to save an emergency fund once in your life — unfortunately, that comes at the beginning of your working career (though, of course, you’ll increase the amount as your salary increases).

2). You basically only have to save for a car once in your life, again at the beginning of your working career. Of course, in subsequent years, you have to save an amount equal to the depreciation since cars eventually have to be replaced, but that’s much different than saving for the large initial purchase.

3). You only have to save a large down payment for a house once in your life, again at the beginning of your working career.  You can then just keep rolling that into future purchases to keep your housing costs affordable for the rest of your life.  Imagine a young person easily putting down 30% on a $600K purchase when they do eventually need to get into the expensive DC-area real estate market!

4). Same deal with furniture, again a large, one-time expense at the beginning of your working life.  Sure, fashions change and eventually people may upgrade, but that’s not a necessity in the same way a bed and a couch are if you have none. You have obviously never been to a young couple’s new house that remains unfurnished for two years because they spent all their money just getting into the house.

5). Imagine being able to contribute large amounts to your 401(k) from day one. Maybe you consider that needlessly “earning money and socking it away,” but go and play around with a compound interest calculator online if you don’t understand the benefit of doing that.

Finally, imagine if young people lived at home until they got married, say from age 22 to 29.  Even if they made only $75,000 a year and paid $15,000 in taxes, they might be able to save something close to 100% of the remaining $60,000.  Over the course of seven years, that’s $420,000, enough to do all of the things listed above.  How much easier would that make the rest of your life![/quote]

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