Baby Boomer Bank is Closing

Many Baby Boomer families, such as upper-middle-class professionals, are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children's careers.  But pay cuts, layoffs and the decade-long flatlining of the stock market mean many families can no longer help their children.

This comes as young adults could use a financial helping hand more than ever.  The unemployment rate for workers ages 16 to 29 was 15.2% in March, the highest rate since 1948, according to the Bureau of Labor Statistics.

Many parents who were set to retire are now delaying it to compensate for battered retirement accounts, leaving even fewer openings for younger workers to fill. There are an additional 500,000 workers over the age of 65 in the work force now compared with 2007.

The average length of unemployment, 31 weeks, is at its highest level since 1948. There were a total of 2.3 million unemployed college graduates in March 2010, 1.45 million more than in March 2007, with heavy layoffs in white-collar sectors such as finance.

"Now, not only do parents no longer have the money to help their children out, but banks will no longer lend to home buyers without the income to support repayment," says Cheryl Russell, a demographer and author of "Americans and Their Homes: Demographics of Homeownership."  The rate of home ownership among people ages 25 to 29 fell to 37.7% last year, from a peak of 42% in 2006, according to the U.S. Census.

The bank of Mom and Dad is closing at a time when young people are having trouble borrowing from traditional lenders.  As a result, many young people are now moving home to save on rent.  About 21% of young adults say they've either moved in with a friend or relative, or had a friend or relative move in with them because of the economy, according to a study from the Pew Research Center.

Source: The Wall Street Journal, April 5, 2010

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