Children raise financial issues when they grow up but not out

STAYING AHEAD

April 18, 1993|By JANE BRYANT QUINN | JANE BRYANT QUINN,1993, Washington Post Writers Group

New York -- If you have a boomerang child at home -- or if you PTC are one -- you're part of the nation's steady adaptation to a lower standard of living. Boomerangers are young adults who formerly might have left the nest but have chosen to go home (or stay home) instead. About 11 million twenty-somethings have yet to give up their childhood rooms.

Some boomerangers fit the stereotype of a sponging kid: unfocused, unemployed, immature. Some are divorced, with nowhere else to go. About 34 percent are students.

Most of the rest are reverting to an older tradition: young single people staying at home until they get married or save enough money to get an acceptable home of their own.

Delayed marriage explains much of the phenomenon. When young people can't earn as much as they want, they're slower to start families of their own. Today, young men marry at a median age of about 26; women, 24. That's four years later than people paired off 30 years ago -- and the more young singles there are around, the more adult children will live at home.

Of those in their 20s, nearly half of the singles are still with their parents, compared with 3.6 percent of the marrieds.

Among the middle classes, comfort is the other reason not to leave. Boomerangers often can support themselves, says Beth Hartung of California State University, but they can't afford a big apartment or a house. So they've borrowed a slice of their parents' prosperity until they can afford their own.

Family tensions often rise when children are unemployed or when grandchildren move in, says William Aquilino of the University of Wisconsin. But without these irritants, a solid majority of parents say they like having their children around.

Households mesh best when parent and child put their expectations on the table and negotiate as consenting adults. The biggest issues are financial support, personal relationships and the child's contribution, in cash or in kind. Here are some of the other money questions:

* Health insurance: Young adults can't be included in their parents' insurance unless they're full-time undergraduates and under age 23 to 25, depending on the policy. If parents can afford it, they should get the children covered.

Go for a health maintenance organization or a major-medical policy with a high deductible, maybe $1,000 to $3,500. For temporary coverage, insurance agent Elizabeth Morrison of W F Corroon in Baltimore suggests the short-term major-medical -Z policies offered in most states by John Alden Life Insurance and Time Insurance.

Prices vary by city and are higher for women. A person under 30 can get six months of coverage ($500 deductible, nothing for pre-existing conditions) for $172 to $615. Each company allows one six-month repurchase, so using both companies gets you coverage for two years.

* Car insurance. Add the child to the parent's policy, if he or she will drive the family car. The premiums won't change unless the child is under 25 (sometimes under 30) or has a bad driving record. The child's car can be insured with the parent's company at a discount price.

* Student aid. Living at home won't affect the child's chance of getting student loans or grants. A student 24 and older, or enrolled in a graduate or professional school, can apply for federal programs (and most state-university scholarships) based solely on his or her own income. Private colleges, however, want to see what the parent can contribute, regardless of where the child lives. When students are under 24, the feds check the income of the parent they live with most.

* Personal exemptions. Parents can claim an adult child (under 19 or a full-time student under age 24) as long as they provide more than half the support. "Full-time" study means five calendar months. So you'd get a write-off for a 22-year-old in school from January through May.

* Rent. Rent paid by the child is not considered taxable income as long as parents don't charge the full market rate, says Tom Ochsenschlager, of the accounting firm Grant Thornton.

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