Would you move back in with your family to save money?

Jessica Lawson, 31, made that choice seven years ago after some “careful conversations”. She now lives in a four bedroom home in Melbourne, split into three separate living areas for her and husband John, sister Emma and mother Iris.

“We talked about it as a family and made the decision that our money would be better used in buying a property together,” Ms Lawson says.

The transition was difficult. “You go from living three separate lives and having your own space and time out to suddenly being involved in a group house again, which I hadn’t done for a while,” she says.

• Saving money is getting harder
• Rise of the Super Boomers
• The plight of the older Australian worker
• Dream bigger than home ownership

What started as a “very practical” financial move – to invest, save money and build a strong credit rating – turned into a perfect safety net.

One week before the house settled, Iris, 59, was diagnosed with chronic lymphatic leukaemia. Two weeks after moving in, Jessica was made redundant (she has since found another job). Six months in Emma, 28, was diagnosed with peripheral neuropathy, which has left her unable to work and with no feeling in her fingers and her legs below the knee.

“Having the security of the home meant we could push through,” Ms Lawson says. “And we’ve even capitalised on a low interest rate fixed for the next few years which means that even though I am the only person working now we are still ahead.”

Ms Lawson saves approximately $200 a week by share living, and doubts she would have been able to afford a home loan otherwise. Friends of hers pay $3,200 a month mortgages, compared to her $1,200 a month. Other friends cannot afford a mortgage at all.

The idea of moving back in with family in adulthood may not be a trend at the moment (although ABC Radio National did report on a similar multi-generational house in Sydney), but superannuation funds say it could be in future.

Lack of super

CEO of Club Plus Super Paul Cahill says more older Australians will look to multi-gen housing when their superannuation runs out. And it probably will run out, he says.

Recent modelling by the fund suggests that the average 65-year-old retiree’s super balance will likely be exhausted after only six years of retirement, if not earlier.

A recent report from Deloitte found that Australians need to start topping up their super with an additional 5.5 to 7.5 per cent of their salary to retire comfortably without relying on the age pension.

As super dwindles, moving back in with family will be “economically the best way” for retirees to save money and receive in-home care, Mr Cahill says.

“With our research, we found out that as people get older they don’t need the big house, but they still need support,” Mr Cahill says. “Support is probably the more critical of the two, and how they go about achieving that support in many instances is to try and get as close to family or friends as possible.

“As moving back in with children may be the most cost effective option for many retirees, Australia needs to prepare for this likelihood or take immediate steps to reform the superannuation system so that it is better able to support Australians wishing to enjoy a lasting and sustainable retirement,” Mr Cahill says.

Not buying it

National Seniors CEO Michael O’Neill says he does not accept Club Super’s argument, calling it “almost alarmist”.

“I don’t accept the fundamentals of what they’ve suggested,” he says, because it understates the significance of the age pension.

But Mr O’Neill has “certainly” seen an increase in Generations X and Y living at home longer, and doesn’t deny that some older Australians are moving in with family.

“There is limited evidence of senior Australians shifting back in with children. There are circumstances where there’s care involved, where you may well find that multi generational housing is happening,” Mr O’Neill says.

For Jessica Lawson, multi-gen housing has helped her provide care for her mother and sister and invest for the future. She and her husband have no intention of moving out any time soon.

“Our intent is to continue living together after we have children so we have our own little ‘village’ raising our kids,” she says.