Financial Planning

Pros and Cons of Living in a Multigenerational Household

Published by Bob Gustafson

Pros and Cons of Living in a Multigenerational Household

In recent years, there has been a resurgence of multigenerational households. This living arrangement involves multiple generations of a family sharing a home, either by choice or necessity. But as I’m sure you can imagine, cohabitating in this type of environment spans from being wonderful to a complete disaster. While the concept of living with extended family members may seem old-fashioned to some, forming a multigenerational household does have many benefits and drawbacks that are worth considering.

What is a multigenerational household?

According to Pew Research Center, multigenerational households are defined as including two or more adult generations (with adults mainly ages 25 or older) or a “skipped generation,” which consists of grandparents and their grandchildren younger than 25. Multigenerational living has grown steadily in the U.S., with the share of the U.S. population in multigenerational homes more than doubling from 7% in 1971 to 18% in 2021.

If you’ve made the decision to try a multigenerational household, then it’s critical to plan for it. In our experience, the people who have really thought through this strategy, analyzed the details, and spelled out a plan have the best chance for success.

Planning includes bringing in professionals (lawyer, financial planner, insurance agent) to ask the right questions and help develop a plan so every detail is covered.

Benefits of a multigenerational household

Built-in support system

One of the major benefits of multigenerational living is the built-in support system. When multiple generations of a family live together, there is always someone around to offer help, support or advise. This can be especially beneficial for families with young children or elderly family members.

  • As parents age, caregiving is inevitable. The convenience of having your parents under your own roof eases the caregiving burden.
  • If you have younger children, the grandparents can be a built-in babysitter.

Living with family members can provide emotional support and a sense of security. It can be comforting to know that there are always people around who care about you and are willing to lend a helping hand when needed.

However, living with family members can create a sense of dependency, especially for younger family members. This can make it difficult for them to develop independence and self-sufficiency. It is important to strike a balance between providing support and encouraging independence.

Strengthened Family Bonds

Living in close proximity to family members can help strengthen family bonds. Multigenerational living can provide opportunities for more frequent family gatherings, shared experiences, and shared memories. This can lead to stronger relationships and a greater sense of community among family members.

If you have younger children and your parents or in-laws move in with your family, the grandparents and grandchildren may develop a much deeper and more significant relationship. This scenario creates a stronger connection within the family that can be really beneficial.

Financial benefits

One of the biggest benefits of a multigenerational household is the financial advantage. Sharing expenses with multiple family members can significantly reduce the cost of living. This can be especially helpful for young adults who are just starting out in their careers or for elderly family members who are on a fixed income.

Sharing expenses can help you save money to fund your retirement, save for your kids’ education, or even to purchase a vacation home.

Drawbacks of a multigenerational household

Deteriorating relationships

Living in close quarters with family members can sometimes lead to conflicts. Differences in opinions, lifestyles, lack of privacy and routines can cause tension and disagreements. It is important to establish clear communication and boundaries to avoid conflicts and maintain healthy relationships.

When it comes to in-laws, unfortunately, more often than not, there’s usually some negativity surrounding these relationships. In fact, most in-law relationships (either your spouse’s parents or child’s spouse) can be described as mediocre at best! And that’s before you’ve tried living with them. You really need to think through this decision and have plans in place before you jump into living together!

If your mother-in-law drives you crazy and she’s moving in, then you need private space away from her. On the flip side, your mother in-law should also have her own space where she can have privacy.

Another scenario to think about is divorce. If you and your spouse split up, how will that affect your mother-in-law’s living situation? In a society where half of the marriages end in divorce, you need to be realistic and have plans in place.

Bad blood between siblings

In some cases, when a parent moves in with one child, it causes problems with the other siblings.

For example, the child living with the parents could begin to resent their siblings for not having to live and take care of their parent. Or, on the flip side, the child who lives with the parents may be getting more assets in the parent’s will. It could even be that the other siblings don’t think the parents should have to pay for anything at the house.

Because of these potential issues, it’s critical for everyone involved to be transparent. Discuss these and any other potential problems and do as much damage control as possible before the cohabitation begins.

Insurance issues

As you’re probably realizing, we can’t emphasize enough that planning is key! Another area of concern is with your insurance. If your in-law still drives and has a car, it’s important you’re all on each other’s policies. Depending on your personal situation, you may need to look into a specialty homeowner’s policy that will protect all of you in case something happens to the home.

Is a multigenerational household right for you?

There are both pros and cons to living in a multigenerational household. While the benefits can include financial stability, emotional support, and opportunities for intergenerational learning, the drawbacks can include conflicts over living arrangements and differences in cultural values. Ultimately, the decision to live in a multigenerational household should be based on individual circumstances and the needs and preferences of all parties involved. With open communication, mutual respect, and a willingness to compromise, families can create a harmonious living situation that benefits everyone.

So, if you’re thinking about a multigenerational household, our advice to you is to line up experts to guide you through the process and set you up for success. And for more information on this topic, listen to our podcast below.