Households with Boomerang Kids Segment Summary July 2014
Source: 2012–13 MacroMonitor
The number of households with Boomerang children—children ages 18 and older who left home only to return or who failed to launch—has increased from 8 million in 2002 to 14 million in 2012. About 11% of all US households currently have Boomerangs—offspring who are living in the household but whom parents cannot claim as dependents for tax purposes. Boomerang Households is a new transitory Life Stage. This Life Stage is very disruptive for households, because the increased financial burden occurs at a time when many household heads are preparing for retirement in earnest. It is disruptive for the Boomerangs because the delay in financial independence and household formation will have a lifelong effect. The postrecession slow jobs recovery suggests that the number of Boomerang Households will continue to grow.
Total annual household income (HHI) divides Boomerang Households into two main groups. The smaller proportion of Boomerang Households is middle-class or higher (HHI of $100K or more); the majority (almost half) belong to the low or low-middle class (HHI of $50K or less).
- The mean age of Boomerang Household heads is 54.
- The mean income is $66K, in comparison with $69K for all US households. One-third have a mean income of $100K or more; slightly more than one-half have a mean income of $50K or less.
- Over half have a high-school diploma or less; heads with a college degree or higher are below average for Boomerangs.
- Somewhat more than one-half are married; 33% are single-headed households.
- Boomerang heads are more likely than average to be crafts workers (10%) and machine operators (11%).
- Almost half are retired; almost one-quarter are not retired and are not preparing for retirement—an equal proportion are not retired but are preparing.
- Boomerang Households are as likely to live in the suburb of a large city (23%) as they are to live in a rural area.
- One-quarter support adults whom they can claim on tax returns because the dependent is infirm, aged, disabled, or handicapped; 46% of these dependents belong to a generation younger than that of the household head.
Because over half of households with Boomerangs have annual incomes of less than $50K, the aggregate profile of all households with Boomerangs is downscale. Remember, though: One-third of Boomerang Households are not low-resource households. If Boomerang Households split into two subsegments—upscale and downscale—the financial profiles would be quite different. Overall, households with Boomerangs:
- Have lower-than-average mean balances of total financial assets, total investable assets, total liquid assets, and equity in other real estate. However, because the most affluent third do have higher-than-average assets, households with Boomerangs have an average mean total net worth: $364K for Boomerang Households, in comparison with $365K for all households.
- Are more likely than average to own a business or professional practice (13%) and more likely than average to have cash value of life insurance.
- Are twice as likely as average to have higher mean balances in money market mutual funds.
- Are average (40%) for owning any type of investment account but have a below average mean amount (net) in investment accounts—$310K (including 0), in comparison with $403K for all households.
- Are more likely than average to own credit insurance, group life insurance through an organization other than an employer, individual life insurance, individual dental or eye insurance, disability insurance, and "other" insurance products. The annual mean household expenditure for insurance in total is average ($12K), in comparison with the annual expenditure for all households ($11.2K).
- Are half again as likely to have an education loan (17%) as are all households (12%); however, the mean owed amount ($34K) is more than for households without Boomerangs ($29K).
- Although the incidence for all households is low (4.5%), Boomerang Households are more likely than average to have a second mortgage (7%); the mean owed amount is $103K, in comparison with $68K for all households.
- In a typical month, almost half self-report that they have, on average, $500 or less in disposable income after they pay for basic expenses such as food, clothing, shelter, and utilities.
Financial Attitudes and Interesting Tidbits
Two in five Boomerang Household heads are hardworking adults; many do their best to be financially responsible but are struggling to make ends meet; one in five heads live in poverty—their annual household income is $25K or less. With few, if any, resources to spare, the majority are dissatisfied with their current financial situation but unable to change their circumstances. Overall, Boomerang Households:
- Are concerned about their amount of household debt and afraid they are not saving enough for future needs
- Are unsophisticated money managers
- Recognize they need financial advice but lack the confidence to seek help (or lack the ability to pay for advice)
- Are distrustful of financial institutions
- Worry about replacing income should a wage-earner die
- Are concerned about protection: for savings, against property loss, and against financial crimes.
Many Boomerang Households are struggling financially to support and successfully launch their Boomerang. This market represents a business opportunity for insurance providers and depositories in particular.
Attitudes about insurance products are positive and distinctive; the value of meeting protection needs is readily apparent. The majority of Boomerang Households believe that insurance can offer their family protection, to ensure that a traumatic event such as a major illness, property destruction, or impact on the income provider(s) does not immediately condemn the household to bankruptcy. Even policies that offer only modest amounts of protection should find favor because some protection is better than no protection.
Although the majority of Boomerang Households are unlikely to become investors, most do recognize the importance of saving. Depositories that offer savings clubs, linked transaction accounts, debt-consolidation products, automatic payments, and rudimentary financial advice in a helpful, encouraging, strings-free manner will benefit from increased loyalty and potential account aggregation; additional opportunities may exist for fee-generating activities.
Learn more: Contact us to request an on-site presentation of these findings along with a Q&A session. Presentations are available to MacroMonitor subscribers for a small additional fee.