It’s costing you up to $18,000 to have your adult kid live at home — and it’s killing your retirement. What to do now to save your finances

Failing to take advantage of those years while simultaneously funding an adult child’s expenses is one of the most costly financial errors a pre-retiree can make.

The problem, according to Savings.com’s analysis, is described as a pattern placing “significant strain on many parents’ financial security” — one that can worsen if economic conditions deteriorate further. And these arrangements can often lack clear terms, leaving adult children unaware of the financial pressure their presence creates.

What to do about it

Getting those terms on the table, and keeping retirement savings intact while doing so, is where professional guidance can help. Ameriprise Financial found that 96% of parents who work with a financial advisor are confident they’ll achieve their top three financial goals, with 78% saying their advisor was helpful specifically in making financial decisions about their adult children.

Vague arrangements can later create resentment on both sides, so set a written agreement. Define what you cover, what they cover and, critically, what the timeline is. Build in a review, maybe in three months, six months or a year. And if they’re living rent-free, treat the arrangement as a gift with conditions, not an open-ended subsidy.

On the tax side, the IRS annual gift tax exclusion sits at $19,000 per person. Providing free housing below that value generally doesn’t trigger a reporting requirement, but formalizing a rent arrangement, even at a below-market rate, creates structure and can have tax benefits worth discussing with an accountant.

And most importantly: don’t pause retirement contributions to fill the gap. Funding your child’s present at the expense of your own future is a trade that makes two people financially fragile instead of one.