The adviser found that the collective costs of ‘boomerang’ children who return or never leave the family home and do not pay rent was as much as £17bn.
It comes at a time when older homeowners are trying to save for retirement and clear their mortgage.
Parents aged between 54 and 62 are most likely to have adult children living at home.
It’s thought around 4.9 million adult children live at home, costing around £3,400 a year through food and the use of utilities, Key found.
In London, more than a quarter of families have adult children at home and the figure rises to nearly half in households with a lone parent.
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It was found that 61% of adult children living at home are mainly male.
Key says later life lending solutions such as lifetime mortgages can help over-55s offer support to help children move out on their own.
Homeowners can choose to pay interest in full, in part or not at all and to even make regular capital repayments.
Will Hale, chief executive of Key Equity Release, said: “Adult children living at home is a long-term trend across the UK, with the recent tough jobs market for graduates and rising rent costs as well as the struggle to raise deposits for mortgages and meet lender affordability requirements adding further pressure.”
He added: “Many over-55s homeowners will have substantial property wealth which they can put to use, easing the immediate financial pressure resulting from a child returning to live at home, which may include using equity release to pay off their own mortgage, reducing monthly outgoings.
“Products such as modern lifetime mortgages can also be used to make gifts to help adult children with deposits so they can eventually move out and begin their own homeownership journey.
“As always, specialist advice is critical to ensure all appropriate options are considered and that any assistance provided for children does not compromise the customer’s own financial resilience.”
