Last week, I attended the North American Securities Administrators Association annual conference. One panel discussed differences and similarities among the generations when it comes to planning and investing for retirement.
In an aside during the session, Emily Pachuta of BlackRock — the world's largest asset manager — said she thinks the rise of multigenerational households signals how many families will take care of aging parents (as well as youngsters) in the future.
She's spot on. A record 57 million Americans, or 18.1 percent of the population, lived in multigenerational households in 2012, according to Pew researchers. That's double the number in 1980. The return of the multigenerational household is a striking reversal of the post-World War II decline.
A number of factors are driving the trend. The wave of immigrants since the 1970s is one factor. The time and cost savings from having aged parents under one roof is another. The leading edge of the millennials are having children at a time when the cost of child care is steep and rising. Grandparents make for good caregivers.
The multigenerational home will continue to grow in popularity because it's a good safety net. But pooling financial resources among the generations is also smart way to lower the overall cost of homeownership. Elders living in the home have to draw less on their retirement savings and young families lower their child care bill. Multigenerational entrepreneurs can share the costs of running their home-based businesses.
Developers are noticing the trend. Toll Brothers, Lennar and other major builders are designing homes targeted at the multigenerational owner. Remodeling firms are getting into the business with existing homes, too.
Many families should include in their long-term planning and discussions investigating the practicality and desirability of creating a multigenerational home. How would the finances work? Can everyone get some privacy? Does the community support home-based elder care when it becomes necessary?
Age-in-place is the catchphrase of the moment among an older population. They would like to stay in their home. Thing is, by turning that "place" into a multigenerational home may be the best way to turn that desire into a practical solution for the whole family.
Chris Farrell is senior economics contributor, "Marketplace," and economics commentator, Minnesota Public Radio.