Savings and Consumption When Children Move Out
Review of Finance, Volume 20, Issue 6, pp. 2349-2377, October 2016, DOI: 10.1093/rof/rfv064
58 Pages Posted: 28 Jan 2014 Last revised: 6 Dec 2017
Date Written: December 20, 2013
Based on the Italian Survey on Household Income and Wealth (SHIW) and the German Socio-economic Panel (SOEP), we show that household consumption drops after a child moves out of a household, while at the same time, per capita consumption increases significantly. Parents approximately upgrade their personal lifestyle up to the level of childless peers after all children are gone and save only a small proportion of the freed-up resources. Since parents had fewer resources to save while they were young, retirement preparedness among them is a more serious concern than among childless individuals.
Keywords: Household Finance, Consumption, Savings, Children, Retirement Preparedness
JEL Classification: D12, D14
Suggested Citation: Suggested Citation