Andrew Biggs summarizes a new study:

Economists Robert F. Schoeni of the University of Michigan and Kathleen McGarry of Dartmouth analyzed the living arrangements of older Americans using Census data. They showed that the decline in older parents living with their children began in 1940, the year that Social Security first began paying out benefits. This indicates that older parents did not desire to live with their children – or the children did not desire to live with their parents -- but were forced to by need. As Social Security alleviated that need, older parents continued to live independently.

And offers his own two cents:

...adding an additional adult to a household consisting of two parents and two children increases total household costs by less than half as much as it would cost that person to live alone. In the early years of Social Security this increased cost might have been acceptable to bear, in part because early benefits were so generous relative to contributions, but I'm not sure the question is so clear cut today.

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